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Corporate Governance

Tesla’s second vote on Elon Musk’s 2018 pay package: what happened and what the courts decided

Tesla held a second vote on Elon Musk’s 2018 performance award after Delaware Chancery ordered it rescinded. The vote passed in 2024, but the Supreme Court—not the ballot—ultimately restored the package in 2025.

By TheFinanceBase Team 4 min read
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Yes—Tesla shareholders voted again on Elon Musk’s 2018 CEO performance award. They approved the package on June 13, 2024, after Delaware’s Court of Chancery had ordered it rescinded. That vote did not itself overturn the judge’s ruling. The decisive change came later: on December 19, 2025, the Delaware Supreme Court reversed the rescission remedy, reinstated the package and awarded $1 in nominal damages.

Why Tesla held another vote

Tesla’s board and shareholders originally approved Musk’s performance-based compensation package in 2018. A stockholder derivative lawsuit later challenged both the award and the process used to approve it.

After a trial, the Court of Chancery found transaction-specific control by Musk over the grant and concluded that the approval process and related disclosures did not satisfy the applicable legal standard. In January 2024, it ordered the award rescinded. Those conclusions were findings of the trial court, later summarized in the Delaware Supreme Court’s opinion.

Tesla then sought a new shareholder vote on the same 2018 award. In its April 29, 2024 proxy statement, the company argued that losing the award could create a potential accounting charge of more than $25 billion if a replacement package had to be designed. That was Tesla’s stated potential accounting consequence, not a court-verified cost.

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What shareholders voted on in June 2024

At Tesla’s annual meeting on June 13, 2024, a majority of the present and disinterested shares voted in favor of ratifying the rescinded grant. Tesla argued that the vote either ratified the award or made the litigation moot.

The vote concerned the original 2018 package; it was not approval of a newly negotiated compensation plan. It also did not automatically restore the award. Whether a shareholder vote could change the effect of a court judgment was a question for the courts, not something the ballot itself could decide.

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Why the 2024 vote did not overturn the Chancery judgment

In December 2024, the Court of Chancery declined to revise its earlier ruling. The court reasoned in part that the vote took place after trial and could not be used to reverse an outcome that had already been adjudicated. It also rejected Tesla’s ratification arguments on additional grounds, including its assessment of the proxy disclosures.

That produced an important distinction:

  • Shareholder ratification: Tesla’s argument that an informed, disinterested vote should validate the award.
  • Judicial remedy: The court-ordered rescission of the award after the derivative trial.

The June vote supported Tesla’s position, but the Chancery court did not treat it as authority to undo its judgment.

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The appeal changed the ultimate result

The Delaware Supreme Court decided the appeal on December 19, 2025. Its opinion reversed the rescission remedy and awarded $1 in nominal damages. Tesla’s 2025 Form 10-K reports that the 2018 package was reinstated and that the attorney-fee award was substantially reduced.

The Supreme Court’s conclusion was: “We reverse the Court of Chancery’s rescission remedy and award $1 in nominal damages.”

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This does not mean the Supreme Court simply endorsed every aspect of the original approval process. The appellate decision’s controlling effect was to reverse the rescission remedy and resolve the financial remedy as stated in the opinion. The trial court’s findings about control, process and disclosure remain part of the procedural history and should be attributed to that court.

Timeline of the Musk compensation dispute

Date Event What it meant
2018 Tesla shareholders approved Musk’s performance award. The package at the center of the later derivative lawsuit.
January 2024 Delaware Court of Chancery ordered the award rescinded after trial. The trial court found transaction-specific control and deficiencies in process and disclosure.
April 29, 2024 Tesla issued a proxy seeking another vote. The company sought ratification of the rescinded grant and cited a potential accounting charge exceeding $25 billion if a replacement were required.
June 13, 2024 Shareholders voted in favor of the package. The vote did not itself reinstate the award in Chancery.
December 2024 Chancery declined to revise its judgment. The court rejected using the post-trial vote to reverse the adjudicated result and rejected Tesla’s ratification arguments.
December 19, 2025 Delaware Supreme Court reversed the rescission remedy. The package was reinstated, with $1 in nominal damages; Tesla later reported reduced attorney fees.
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What the different dollar figures mean

Several figures associated with the case describe different things and should not be treated as interchangeable.

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Amount Meaning Source or procedural stage
More than $25 billion Tesla’s stated potential accounting charge if it had to create a replacement package. Tesla’s April 2024 proxy rationale, as described by the Delaware Supreme Court.
$2.3 billion Grant-date fair-value figure used by the Court of Chancery in its fee analysis. Chancery valuation, as recounted by the Delaware Supreme Court in 2025.
$345 million The Chancery court’s attorney-fee award before the appeal. Pre-appeal trial-court award; not the final amount after the Supreme Court decision.
$1 Nominal damages awarded after the appellate decision. Delaware Supreme Court, December 19, 2025.

None of these figures is a current market value for Musk’s holdings. The economic value of a stock-based award changes with Tesla’s share price and with the valuation method being used.

Did the second vote overturn the judge’s ruling?

Not when it happened. The June 2024 vote did not overturn the Court of Chancery’s January rescission order, and Chancery refused to revise that order in December 2024. The later Delaware Supreme Court appeal did change the final legal outcome by reversing the rescission remedy and restoring the package.

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What Tesla shareholders should take from the case

  • The 2024 ballot addressed the same 2018 performance award that Chancery had ordered rescinded.
  • A shareholder vote and a judicial remedy operate differently; a vote does not automatically nullify an existing judgment.
  • The trial court’s findings about Musk’s control and the approval process are distinct from the Supreme Court’s later decision on the remedy.
  • The final appellate result, as reported by Tesla, is reinstatement of the 2018 package, $1 in nominal damages and a reduced fee award.

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