Tornetta v. Musk, the 2018 Pay Package, and What the Delaware Supreme Court Did With It

The 2018 Tesla CEO pay package has been a Chancery opinion, a stockholder vote, a second Chancery opinion, and a Delaware Supreme Court opinion. They do not say the same thing. The vote did not erase the first opinion. The Supreme Court did not adopt the vote as its reason. It reversed the remedy.

This page is the receipt. It sits on the lawsuits desk. The company is Tesla. The “funding secured” settlement is a different case: the SEC record.

The grant, in the post-trial opinion’s own figures

Chancellor Kathaleen St. J. McCormick’s post-trial opinion in Richard J. Tornetta v. Elon Musk, C.A. No. 2018-0408-KSJM, was submitted April 25, 2023, and decided January 30, 2024. The plaintiff sued derivatively, for Tesla, over a performance award the board and stockholders had approved in 2018.

The opinion’s opening says the plan offered 12 tranches of options, each equal to 1 percent of Tesla’s shares outstanding on January 21, 2018. A tranche vested only if market capitalization rose by $50 billion and Tesla hit either an adjusted EBITDA target or a revenue target across four consecutive quarters. The opinion states a $55.8 billion maximum value and a $2.6 billion grant-date fair value, and calls it the largest potential compensation opportunity observed in public markets by multiple orders of magnitude.

Label: The opinion’s figures. The “$56 billion” headline is the public rounding of that maximum value, not a second measurement. The $2.6 billion is the grant-date fair value in the same paragraph. A maximum value is not cash paid in 2018.

The court applied entire fairness, held that the director defendants bore the burden and did not carry it, and entered judgment for the plaintiff. The remedy was rescission of the plan. The opinion’s premise, as the Supreme Court later described it, was that the grant could be unwound because the options sat unexercised.

Label: The Court of Chancery’s January 30, 2024 judgment. Rescission is that court’s remedy. It is not the last word. The Supreme Court reversed it.

The June 13, 2024 vote

Tesla’s Form 8-K, filed June 14, 2024, reports the annual meeting on June 13, 2024. Proposal 4 was “to ratify the 100% performance-based stock option award to Elon Musk that was proposed to and approved by our stockholders in 2018.” The 8-K says the proposal was approved. The inspector’s counts:

• Nasdaq standard: 1,760,780,650 for and 528,908,419 against, about 77 percent of votes cast on the proposal.
• Disinterested standard, excluding shares owned directly or indirectly by Elon Musk or Kimbal Musk: 1,348,109,854 for and 528,908,419 against, about 72 percent.

Label: The 8-K. It is a voting result. It is not, by itself, a court order putting the options back. What the vote could do in the pending case was the next opinion.

The same 8-K says Proposal 3, redomestication from Delaware to Texas by conversion, was also approved: about 63 percent of outstanding shares, and about 84 percent of the disinterested votes as the filing defines them. The form’s cover lists Texas as the state of incorporation. Label: That vote, and that cover line. The move to Texas has its own record and is not this page. Queue item 7 stays open for it.

The December 2, 2024 opinion

On December 2, 2024, Chancellor McCormick issued a second opinion, awarding fees and denying the motion to revise the post-trial opinion. The defendants had asked the court to flip the January result because of the June vote. She denied that motion.

The opinion states four defects, each of which it says is enough: there was no procedural ground to reverse a post-trial loss with evidence the defendants created after trial; common-law ratification is an affirmative defense and was raised too late; a stockholder vote standing alone cannot ratify a conflicted-controller transaction; and, even if a vote could have that effect, the proxy statement had multiple material misstatements.

On fees, the court valued the benefit of rescission at the $2.3 billion grant-date fair value it used for that calculation, applied 15 percent, and awarded $345,000,000. The award includes expenses of $1,120,115.50 and costs of $325,684.07. Tesla could elect to pay in cash or in freely tradable Tesla shares.

Label: The December 2, 2024 order. The fee is this opinion’s fee. The Supreme Court later replaced the method. The $345 million figure remains what the Chancery Court awarded. It is not what the Supreme Court left in place.

The Delaware Supreme Court, December 19, 2025

The appeal is In re Tesla, Inc. Derivative Litigation, Nos. 534, 2024 and 10, 11, and 12, 2025. The opinion was submitted October 15, 2025, and decided December 19, 2025. The court sat en banc. The caption says affirmed in part, reversed in part.

The opinion says the justices have varying views on the liability determination, and that the court is taking the narrower path of the remedy. It reverses rescission of the 2018 plan. It reinstates the 2018 plan. It awards the plaintiff $1 in nominal damages. It awards plaintiff’s counsel fees and expenses on quantum meruit, a four-times multiplier of lodestar, and post-judgment interest on the revised fee from December 2, 2024. Disputes about the fee go back to the Court of Chancery. The opinion does not multiply the lodestar out to a dollar total of its own. The $54.5 million figure that appears in the opinion is what the defendants had argued four times lodestar was, in the fee fight below. It is not a sum the Supreme Court computed in the conclusion.

The stated reasons for reversing rescission are that Mr. Musk could not be restored to the status quo after six years of work meeting the milestones, that the increase in his older equity was not a substitute for that work, and that it was not the defendants’ burden to prove the parties could be put back where they were in 2018. By January 2023, the opinion says the plaintiff agreed, all 303,960,630 options had vested and were in the money.

Label: The Supreme Court’s December 19, 2025 judgment. Reinstatement is this opinion. It is not an adoption of the June 2024 vote, which Tesla had also pressed. The court said it was not deciding the case on that path. “Varying views” on liability means this opinion does not announce a single holding that he was, or was not, a controlling stockholder. The remedy is the part the court says it agrees on.

Reuters (Tom Hals, Jan Wolfe, and Abhirup Roy, December 19, 2025) described the restored package as once worth $56 billion and, at the stock price then, about $139 billion. Label: Reuters’ valuations that day. They are not the $55.8 billion maximum value in the 2024 opinion, and they are not the $1 damage award.

The 2025 awards, which are later documents

On August 3, 2025, before the Supreme Court ruled, Tesla’s board approved a 2025 CEO Interim Award of 96 million shares of restricted stock. The 8-K says a special committee of Robyn Denholm and Kathleen Wilson-Thompson recommended it on August 1, and that Elon Musk and Kimbal Musk recused themselves from the board vote. The shares vest on the second anniversary of August 3, 2025, if he remains in eligible service. He must pay $23.34 a share, the split-adjusted exercise price of the 2018 award. The award is forfeited if, before vesting, a final Delaware decision lets him exercise the 2018 award in full. If a decision lets him exercise some but not all of it, the interim shares are reduced so there is no “double dip.”

Label: The August 3, 2025 8-K. An interim grant, with a forfeiture clause aimed at the case that was then on appeal. It is not the 2018 plan.

On September 3, 2025, Tesla granted a 2025 CEO Performance Award, subject to shareholder approval. Shareholders approved it on November 6, 2025. The 8-K filed November 7 reports Proposal 4: 1,892,235,822 for, 564,940,908 against, 12,227,846 abstentions. The terms incorporated from the September 17, 2025 proxy are 423,743,904 shares of performance-based restricted stock, in 12 tranches of 35,311,992 shares. The proxy states a preliminary aggregate fair value of $87.75 billion. Market-capitalization milestones run from $2 trillion on the first tranche to $8.5 trillion on the last. Operational milestones are paired with them. The proxy letter says the full award requires him to create nearly $7.5 trillion in value for shareholders. The excerpt names, among the product goals, 20 million Tesla vehicles delivered, 10 million active FSD subscriptions, 1 million bots delivered, and 1 million robotaxis in commercial operation.

Label: The proxy and the November 6 vote. Approval of a new award is not delivery of the shares. The tranches are unearned until the milestones in that agreement are met. The $87.75 billion is the company’s preliminary fair-value estimate, not the $8.5 trillion market-capitalization milestone and not cash.

On the map

The company is Tesla. The 2018 tweets, the SEC settlement, and the San Francisco verdict are the funding-secured page. The lawsuits hub is the section. Texas incorporation was approved at the same June 13, 2024 meeting and is not written out here.

Sources

Checked October 19, 2026.