Elon Musk’s $139 Billion Tesla Pay Package Reinstated by Supreme Court

• The Delaware Supreme Court reinstated Elon Musk’s 2018 Tesla compensation package, valued at approximately $139 billion, overturning prior Chancery Court rulings that had invalidated it.
• The court awarded Musk $1 in nominal damages, emphasizing that rescinding the package would leave him uncompensated despite fully achieving the performance milestones.
• Mizuho reiterated its ‘Outperform’ rating on Tesla (TSLA) and raised its price target to $530, implying nearly 10% upside from the current $482.65 level. The call reflects growing optimism around the company’s advancing robotaxi program.

The Delaware Supreme Court has reinstated Elon Musk’s 2018 compensation package from Tesla, overturning prior rulings by the Chancery Court that had invalidated it. The package, consisting of stock options tied to performance milestones, was originally valued at approximately $56 billion upon vesting but is now worth around $139 billion based on current stock prices. The court awarded the plaintiff $1 in nominal damages while restoring the full award to Musk.

The decision emphasized that rescinding the package would be inequitable, as it would leave Musk uncompensated for six years of efforts, despite undisputed evidence that he fully achieved the required milestones. These milestones focused on market capitalization growth and operational targets, which Tesla met, delivering substantial value to shareholders.

This ruling resolves a long-standing legal dispute that began with a shareholder challenge in 2018, alleging undue influence by Musk over the board. Although shareholders had approved the package initially, the Chancery Court twice rejected it, citing governance concerns. The Supreme Court’s reversal upholds the shareholders’ original decision and addresses broader implications for executive compensation in Delaware-incorporated companies.

Tesla’s market capitalization stands at approximately $1.6 trillion, reflecting strong investor confidence in the company’s trajectory. In related analyst activity, Mizuho reiterated an ‘Outperform’ rating on Tesla (TSLA) and raised its price target to $530 from $475, citing optimism around the company’s robotaxi initiatives.

Tesla has advanced its robotaxi program, with Elon Musk confirming that testing of fully driverless vehicles – without safety monitors – is underway in Austin. The service initially launched with monitors in the passenger seat, but progress in Full Self-Driving technology is enabling the removal of chaperones. Mizuho highlighted that improvements in this area could accelerate fleet expansion in cities like Austin and San Francisco, drawing comparisons to Alphabet’s (GOOGL) Waymo, which currently delivers 450,000 fully automated rides per week and targets 1 million weekly trips by the end of 2026.

In parallel, Tesla shareholders approved a new compensation structure for Musk in November, potentially worth up to $1 trillion if ambitious milestones are met, including achieving an $8.5 trillion market cap and developing a succession plan. This package builds on the restored 2018 award and aligns incentives with long-term growth in autonomy and other high-potential areas.

The reinstatement of the 2018 package provides clarity for Tesla’s leadership and reinforces the role of shareholder approval in corporate governance decisions.

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