The 2024 shareholder vote did not end the legal fight over Elon Musk’s 2018 Tesla pay package because it came after a Delaware trial court had already ruled against the award and ordered it rescinded. Tesla asked that court to change its judgment, but it declined. The Delaware Supreme Court later reversed the rescission remedy and reinstated the 2018 plan on appeal in December 2025. The vote mattered; it was not itself the event that restored the plan.
What was the 2018 Tesla pay package?
The 2018 CEO Performance Award was compensation in the form of stock options, not a cash salary payment. It divided the award into 12 tranches tied to market-capitalization and operational milestones. Musk could earn the options by meeting those targets, subject to the plan’s terms.
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The Delaware Court of Chancery described the award’s maximum value as $55.8 billion and its grant-date fair value as $2.6 billion in its 2024 post-trial opinion. Those figures measure different things: the maximum potential value under the plan and the award’s value at grant, respectively. Neither is a statement that Tesla paid Musk that amount in cash. Read the Court of Chancery’s opinion.
Why did the case continue after shareholders voted?
The lawsuit was a derivative action brought by a Tesla stockholder on the company’s behalf. After trial, the Court of Chancery found that Musk exercised transaction-specific control over the award. That finding did not mean he held majority voting power: the court described him as holding 21.9% of Tesla’s voting power in 2024, while focusing on his influence over this particular transaction and the board process.
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Applying entire-fairness review, the trial court concluded that the defendants had not proved the award entirely fair. It also found disclosure shortcomings in the original shareholder approval and ordered rescission. The court’s post-trial opinion stated, “The court also concluded that the Defendants failed to demonstrate that the transaction was entirely fair.” That was the trial court’s conclusion, not the final appellate remedy. The opinion explains the trial court’s findings.
Tesla put the award to shareholders again in 2024, adding disclosures that included a copy of the Chancery decision. A majority of disinterested shares voted in favor. But this vote occurred after the trial ruling; Tesla then asked the Chancery court to revise its existing judgment. The court declined in the circumstances before it, considering the vote’s timing and procedural posture as well as disclosure and fiduciary-law questions. A later vote did not automatically erase a judgment already entered after trial.
How the two shareholder votes differed
| Issue | Original approval | 2024 vote |
|---|---|---|
| Timing | Before the derivative case went to trial. | After the Chancery court’s post-trial ruling and rescission order. |
| Disclosure | The Chancery court later found shortcomings in the disclosure for the original approval. | Tesla provided additional disclosures, including a copy of the Chancery decision. |
| Legal posture | Approval of the award before the court had ruled on the stockholder’s claims. | A later vote followed by Tesla’s request that the court revise its judgment; it did not itself vacate that judgment. |
| What followed | The stockholder’s derivative lawsuit proceeded to trial. | The Chancery court declined to revise its judgment; the case continued on appeal. |
The Delaware Supreme Court’s account of the 2024 vote and subsequent proceedings appears in its December 19, 2025 opinion.
What did the Delaware Supreme Court decide?
On December 19, 2025, the Delaware Supreme Court reversed the rescission remedy and reinstated the 2018 plan. It awarded the plaintiff nominal damages and plaintiff’s counsel fees on a quantum-meruit basis, plus expenses. The Supreme Court put the result plainly: “We reinstate the 2018 plan and award the Plaintiff nominal damages.”
That distinction answers the central question: the 2024 vote did not restore the award by itself. The operative change came from the Supreme Court’s appellate judgment. The appellate opinion also recounts that the award milestones had been achieved and that, by January 2023, all 303,960,630 options were vested and in-the-money, as acknowledged by the plaintiff. That describes the options’ status in the case record; it is not a claim that the options’ value had been paid to Musk in cash. Read the Delaware Supreme Court’s decision.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.How the 2018 plan differs from Musk’s later Tesla awards
The Supreme Court’s ruling addressed the 2018 plan, not every subsequent compensation arrangement. Tesla’s fiscal 2025 Form 10-K, filed in 2026, describes two separate 2025 awards:
- Interim award: Tesla reported granting 96.0 million restricted shares on August 3, 2025. The shares carried a two-year service condition and a $23.34-per-share purchase price. Terms addressed reducing or forfeiting the interim shares if the 2018 award became exercisable, to prevent a double benefit. Tesla reported a $26.06 billion grant-date fair value for this award and said no related compensation expense had been recorded as of December 31, 2025, because vesting was not deemed probable.
- 2025 CEO Performance Award: Tesla reported granting approximately 423.7 million shares on September 3, 2025. Shareholders approved this separate award on November 6, 2025. Like the 2018 plan, it has 12 tranches with market-capitalization and operational milestones, alongside service and vesting conditions.
These awards have distinct terms and approval histories; the later performance award is not the 2018 plan that the Supreme Court reinstated. Tesla’s 2025 Form 10-K reports the later awards and their accounting treatment.
What the figures do—and do not—show
The amounts discussed in this dispute are not interchangeable. The Chancery court’s $55.8 billion figure was the 2018 award’s maximum value; $2.6 billion was its grant-date fair value. Tesla’s later interim award had a reported $26.06 billion grant-date fair value. The Supreme Court also recounted Tesla’s statement in its 2024 proxy that it could face an accounting charge in excess of $25 billion if it needed to formulate a new pay package. That was Tesla’s stated rationale, not a court finding that the charge actually occurred.
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Outbyte PC Repair FREERepair Windows errors before they cause bigger problemsFix Now →Outbyte Driver Updater FREEScan for outdated or missing drivers - takes under a minuteDriver Scan →Share counts, option status, potential accounting charges, grant-date fair values and maximum plan values describe different things at different times. They should not be presented as amounts of cash compensation Musk received.
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