Economy|Elon MuskMusk wins US appeal to restore 2018 Tesla pay packageThe Delaware Supreme Court rules in favour of Musk and his $56bn compensation package.

The Delaware Supreme Court in the United States has reinstated Elon Musk's 2018 compensation package from Tesla, initially valued at $56 billion. This decision reverses a previous lower court ruling that had invalidated the agreement.

The 2018 compensation arrangement granted Musk options to purchase approximately 304 million Tesla shares at a significantly reduced price, contingent on the company achieving specific milestones. These conditions were met, and the value of the package increased substantially due to the rise in Tesla's stock price, reaching an estimated value of $120 billion by early November. The options account for approximately 9 percent of Tesla’s total outstanding stock.

Following shareholder approval of the 2018 plan, Tesla was sued by Richard Tornetta, an investor with nine shares, leading to a five-day trial in 2024. Delaware Judge Kathaleen McCormick ruled that the plan should be rescinded due to conflicts of interest and undisclosed key facts during the shareholder vote. This decision was later overturned by the Delaware Supreme Court.

In response to legal challenges, Tesla has shifted its incorporation to Texas, which imposes a requirement that any suing investor or group must own at least 3 percent of the company’s stock, valued at approximately $30 billion. This move aims to mitigate the risk of similar legal actions concerning the company’s compensation plans.

In November, Tesla shareholders approved a new pay package for Musk, potentially valued at $878 billion, contingent on achieving targets related to self-driving technology, a robotaxi network, and humanoid robot sales.

Based on reporting by Al Jazeera.