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Elon Musk's Tesla pay package blocked again by judge

By Megan Ziegler
Published  December 3, 2024 11:21am EST
Elon Musk
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The Brief

    • A Delaware judge has again blocked a massive, multi-billion dollar Tesla payout to Elon Musk. 
    • The CEO compensation package was initially approved by shareholders in 2018 and again in the summer of 2024, but has faced legal challenges. 
    • Tesla said it will be appealing the decision. 

Elon Musk’s massive pay package for serving as Tesla CEO has been hanging in limbo for months, and was blocked again by a Delaware judge this week. 

Chancellor Kathaleen St. Jude McCormick was asked to unblock the deal after Tesla shareholders met over the summer and voted to restore the pay package, but she upheld her initial ruling. 

If his compensation package makes it through the courts, it will be the largest payday to a CEO of a U.S. public company – far in the billions. 

Here’s what to know about the pay package: 

Elon Musk pay package

FILE - Elon Musk looks on ring side during the UFC 309 event at Madison Square Garden on November 16, 2024 in New York City. (Photo by Chris Unger/Zuffa LLC)

Musk’s compensation as Tesla CEO comes through packages of stock options, rather than a salary or bonuses. 

The pay package that’s in legal jeopardy is a 10-year pay plan that was initially approved in 2018 by Tesla’s board and shareholders, rewarding Musk for hitting milestones that included raising Tesla’s market value, pretax income and revenue.

Soon after, a Tesla stockholder sued to challenge the package, which equaled about $56 billion at the time based on Tesla’s market value.

In January 2024, a Delaware judge blocked the package, saying the process for approving it had been "deeply flawed." She said that Musk controlled the company’s board at the time and that shareholders weren’t fully informed on what they were approving.  

But the company said Musk deserves the pay because he turned Tesla into the top-selling electric vehicle maker in the world, increasing its market value by billions.

Tesla shareholders met over the summer and voted to restore the pay package, worth then about $44.9 billion, and Musk’s attorneys asked the judge to unblock the payment. 

But on Dec. 2, 2024, McCormick upheld her initial ruling to block the package in a 103-page ruling. She noted, among other things, that a stockholder vote standing alone cannot ratify a conflicted-controller transaction.  

Tesla is likely to appeal the ruling to Delaware’s Supreme Court. 

"The court’s decision is wrong, and we’re going to appeal," Tesla posted on X following the ruling. X, formerly Twitter, is now owned by Musk. 

"Shareholders should control company votes, not judges," Musk added on X. 

The pay package has fluctuated over time alongside Tesla’s stock price. The pay package would now reportedly be worth about $101 billion.

The Source: Information in this article was taken from The Associated Press, which obtained legal documents from Delaware Chancellor Kathaleen St. Jude McCormick’s court rulings. This story was reported from Detroit. 

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