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The justices on the State Supreme Court heard arguments in a long dispute about whether the Tesla chief executive’s compensation was fair to shareholders.
Oct. 15, 2025Updated 1:53 p.m. ET
A long-running dispute about Elon Musk’s multibillion-dollar pay package from Tesla moved a step closer to resolution Wednesday as the Delaware Supreme Court heard arguments in an appeal filed by the company.
Tesla is challenging a 2023 decision by a lower-court judge, who found that shareholders had not been properly informed about the plan that helped make Mr. Musk, the automaker’s chief executive, the world’s richest person. The judge, Chancellor Kathaleen St. J. McCormick of the Delaware Court of Chancery, also found that members of Tesla’s board were not sufficiently independent.
Besides affecting Mr. Musk’s wealth, a decision in the case could have ramifications on where businesses are incorporated. Many large American companies have long been domiciled in Delaware because it is widely considered to have strong corporate laws and its courts are seen as efficient at resolving disputes. The state, which has sought to burnish and protect that reputation, relies on the revenue and jobs that come with being the legal home to so many businesses.
At an hourlong hearing in Dover, the justices considered Tesla’s argument that Delaware courts should honor a vote by shareholders last year, after Ms. McCormick’s decision. That vote reaffirmed the compensation package, which is worth more than $50 billion.
Some of the justices asked questions that seemed sympathetic to Tesla’s argument that the second shareholder vote fixed flaws in how the package was formulated in 2018. Ms. McCormick ruled that Mr. Musk manipulated the negotiations with Tesla’s board and that the company did not disclose some board members’ conflicts of interest.
Justice Karen Valihura implied that upholding the lower-court decision would leave Mr. Musk with nothing to show for his management of Tesla. “Do you have a case where a court has equitably rescinded an executive’s compensation after years of work?” she asked Gregory Varallo, who represented the dissident shareholder who filed the suit.
