Tesla asked shareholders in 2024 to vote again on Elon Musk’s 2018 performance-based stock-option award, often described in headlines as a $56 billion pay package. The June vote passed, but it was not the final legal word: the Delaware Supreme Court later reinstated the 2018 plan and awarded the plaintiff $1 in nominal damages. The headline figure is historical shorthand, not a current valuation or a cash salary.
What Tesla asked shareholders to approve
Tesla’s 2024 solicitation asked investors to support Proposal Four, a second vote on the 2018 CEO Performance Award. Tesla Chair Robyn M. Denholm’s May 21, 2024 letter urged shareholders to vote on two proposals “to protect your investment in Tesla”: the award and reincorporating the company in Texas. The word “begs” is a characterization of the request; the filing itself was a shareholder solicitation.
The award was a performance-based stock-option plan, not a $56 billion cash payment. It had 12 tranches, each tied to both a market-capitalization milestone and an operational milestone. The Delaware Court of Chancery described its value as $55.8 billion in 2024. That is a historical figure cited in the litigation, not the options’ present market value.
Why there was a second vote
Tesla shareholders approved the award in 2018, with 73% of votes cast in favor, excluding Elon and Kimbal Musk’s ownership, according to the Delaware Supreme Court’s account. In January 2024, the Court of Chancery found that the award was a conflicted transaction subject to entire-fairness review and that the defendants had not met that standard. It ordered rescission.
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Tesla then resubmitted the award for a second vote with additional disclosure, including a copy of the Chancery court’s opinion. At the June 13, 2024 annual meeting, a majority of present and disinterested shares voted in favor. Tesla argued in its solicitation that the award had delivered value and that the vote concerned shareholder rights. Those were the company’s advocacy claims, not neutral judicial findings. Tesla also reported “~1,100% total shareholder return since March 2018” in the filing; that number was Tesla’s own stated figure.
What the courts decided
| Stage | Decision or event | Effect |
|---|---|---|
| 2018 shareholder vote | 73% of votes cast supported the award, excluding Elon and Kimbal Musk’s ownership, according to the Delaware Supreme Court. | The award was approved by shareholders. |
| January 2024, Delaware Court of Chancery | The court found the transaction conflicted, applied entire-fairness review, and ordered rescission. | The award was rescinded at the trial-court level. |
| June 13, 2024, second vote | A majority of present and disinterested shares voted for the award. | The vote did not by itself end the litigation. |
| December 2024, Delaware Court of Chancery | The court rejected the argument that the second vote should revise its post-trial decision, stating that “a stockholder vote standing alone cannot ratify a conflicted-controller transaction.” | The trial court did not treat the later vote alone as reversing its judgment. |
| Delaware Supreme Court, final appeal | The court reversed rescission, reinstated the 2018 plan, and awarded the plaintiff $1 in nominal damages. | The 2018 plan was reinstated; the final remedy was nominal damages. |
The final appellate disposition controls the current legal outcome described here. The June 2024 vote and the trial court’s December ruling were separate events, not the end of the case.
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What “$56 billion” means—and does not mean
- It is not a cash salary. The award consisted of stock options earned against specified operating and market-capitalization milestones.
- It is not a fixed current value. The $55.8 billion figure is the historical value the Chancery court described; option value can move with Tesla’s share price.
- It does not describe a realized accounting charge. Tesla argued that it could face an accounting charge in excess of $25 billion if it had to formulate a new package. The Delaware Supreme Court recounted this as Tesla’s proxy argument, not as a charge that occurred.
What mattered in the dispute
The case turned on more than whether shareholders supported Musk’s compensation. The courts examined whether Musk exercised transaction-specific control, whether the approval process and disclosures satisfied fiduciary standards, what legal force the later vote could have, and what remedy was appropriate. The trial court’s rescission ruling was later reversed on appeal; the Supreme Court reinstated the award while granting $1 in nominal damages.
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