Elon Musk's 2018 Tesla CEO pay package has been restored by the Delaware Supreme Court. The judges said a lower court's cancellation of Musk's $56 billion pay plan was too extreme a remedy. Shareholder Richard J. Tornetta brought the initial suit, accusing Musk and the Tesla board of a breach of fiduciary duties. In this article Amazon says AI chief Rohit Prasad is leaving, Peter DeSantis to lead 'AGI' group Musk's 2018 CEO pay package from Tesla, comprised of 12 milestone-based tranches of stock, was unprecedented at the time it was proposed. After it was granted, the pay plan made Musk the wealthiest individual in the world. Tesla shareholder Tornetta sued Tesla, filing a derivative action in 2018, accusing Musk and the company's board of a breach of their fiduciary duties. Delaware's business-specialized Court of Chancery decided in January 2024 that the pay plan was improperly granted and ordered it to be rescinded. In her decision, Chancellor Kathaleen McCormick also found that Musk "controlled Tesla," and that the process leading to the board's approval of his 2018 pay plan was "deeply flawed." Among other things, she found the Tesla board did not disclose all the material information they should have to investors before asking them to vote on and approve the plan. After the earlier Tornetta ruling, Musk moved Tesla's site of incorporation out of Delaware, bashed McCormick by name in posts on his social network X, formerly Twitter, where he has tens of millions of followers, and called for other entrepreneurs to reincorporate outside of the state. Tesla also attempted to "ratify" the 2018 CEO pay plan by holding a second vote with shareholders in 2024. In November, Tesla shareholders voted to approve an even larger CEO compensation plan for Musk. The 2025 pay plan consists of 12 tranches of shares to be granted to the CEO if Tesla hits certain milestones over the next decade and is worth about $1 trillion in total. The new plan could also increase Musk's voting power over the company from around 13% today to around 25%. Shareholders had also approved a plan to replace Musk's 2018 CEO pay if the Tornetta decision was upheld on appeal. That plan is now nullified. As CNBC previously reported, a law firm that currently represents Tesla in this appeal penned a bill to overhaul corporate law in Delaware earlier this year. The bill was passed by the Delaware legislature in March, and if it had applied retroactively, it could have affected the outcome of this case. Read the Delaware Supreme Court's ruling here. watch now