By Becky Peterson

Tesla, along with its board of directors, has turned to the Delaware Supreme Court to settle an ongoing legal dispute over CEO Elon Musk's multibillion-dollar pay package.

On Tuesday, the electric-car maker and the board filed an appeal to a ruling last year by a Delaware Chancery Court judge upholding an order that Musk's pay package be rescinded.

Tesla and board members argue that stockholders twice approved the pay deal and that nullifying it would be unfair to investors, according to legal documents filed with the court.

The board also contended that the lower court was flawed in concluding that Musk could coerce or dominate directors during compensation negotiations, noting that he owned less than a quarter of Tesla's stock at the time.

"The bottom line of the Court of Chancery's decisions is that a compensation plan resulting in spectacular growth should be revoked because it was somehow unfair to the very stockholders who benefited from that growth and overwhelmingly approved the plan-twice," the board's lawyers wrote in a brief. "That counterintuitive result defies settled principles of Delaware law, sound corporate governance, and common sense."

Chancellor Kathaleen McCormick ruled in January 2024 that Tesla's directors were beholden to Musk and the approval process for the 2018 pay deal was tainted and lacked transparency. She upheld her judgement in December, following a Tesla shareholder vote last year which approved the pay package for a second time with an overwhelming 72% majority.

The appeal doesn't come as a surprise, but shows more legal wrangling is ahead, further delaying Musk's pay day.

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March 11, 2025 18:00 ET (22:00 GMT)

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