Tesla recently appealed to the Delaware Supreme Court, seeking to reinstate CEO Elon Musk's $56 billion compensation package. Although the package was approved by shareholders in 2018 and was due to Musk meet all performance targets, it was struck down by the Court of Chancery in January 2024, citing a lack of board independence. Tesla subsequently held another shareholder vote, which showed investors still strongly supported the payout, but the court again rejected it, prompting the company to launch a final legal challenge.
The core of the dispute lies in the conflict between legal process and shareholder will. Presiding Judge Kathryn McCormick called the amount "unimaginably large" and found a conflict of interest in the board's approval. Tesla attorney Jeffrey Wall emphasized that the 2024 shareholder vote was "the most transparent vote in Delaware history" and that investors fully understood its support. Notably, Tesla proposed a new proposal in September of this year, with potential compensation of up to $1 trillion, including the goal of increasing the company's market capitalization to $8.5 trillion. This plan also faces legal scrutiny.
Analysts point out that this case could become a landmark event in corporate governance. If the Supreme Court upholds the shareholder vote, it will strengthen investors' voice in executive incentive plans; if it upholds the original ruling, it could further constrain the conflicts of interest between the board of directors and executives. The market is closely watching the progress of the appeal, while the pay dispute between Musk and Tesla remains unresolved.
