The Harvard Law School Forum on Corporate Governance https://corpgov.law.harvard.edu The leading online blog in the fields of corporate governance and financial regulation. Fri, 10 Jul 2026 15:34:39 +0000 en-US hourly 1 https://wordpress.org/?v=6.5.8 https://corpgov.law.harvard.edu/wp-content/uploads/2024/02/cropped-photography-4-e1706898544564-1-32x32.png What the Tesla Decision Means for Executive Compensation and Other Corporate Issues – The Harvard Law School Forum on Corporate Governance https://corpgov.law.harvard.edu 32 32 What the Tesla Decision Means for Executive Compensation and Other Corporate Issues https://corpgov.law.harvard.edu/2026/02/02/what-the-tesla-decision-means-for-executive-compensation-and-other-corporate-issues/?utm_source=rss&utm_medium=rss&utm_campaign=what-the-tesla-decision-means-for-executive-compensation-and-other-corporate-issues https://corpgov.law.harvard.edu/2026/02/02/what-the-tesla-decision-means-for-executive-compensation-and-other-corporate-issues/#respond Mon, 02 Feb 2026 12:30:00 +0000 https://corpgov.law.harvard.edu/?p=178988?d=20260709154239EDT Posted by Gail Weinstein, Philip Richter, and Steven Epstein, Fried Frank, on Monday, February 2, 2026
Editor's Note:

Gail Weinstein is a Senior Counsel, Philip Richter is a Partner, and Steven Epstein is the Managing Partner at Fried, Frank, Harris, Shriver & Jacobson LLP. This post is based on a Fried Frank memorandum by Ms. Weinstein, Mr. Richter, Mr. Epstein, and Steven J. Steinman, and is part of the Delaware Law Series and the Controlling Shareholder Series; links to other posts in the Delaware Law Series are available here; links to other posts in the Controlling Shareholder Series are available here.

In re Tesla, Inc. Derivative Litigation (Dec. 19, 2025), the Delaware Supreme Court unanimously reversed the Court of Chancery’s rescission of the $56 billion ten-year equity-based incentive compensation package (now valued at $139 billion) that Tesla, in 2018, awarded to Elon Musk, its chief executive officer. The compensation package had been approved by Tesla’s purportedly independent Compensation Committee and board of directors, and also approved, and then ratified, by Tesla’s shareholders unaffiliated with Musk. It was uncontested that, over just six years, Musk had met all of the milestones required for full vesting of the package. The Court of Chancery ordered total rescission of the package, finding that the board’s process had been controlled by Musk and that the “unfathomable” amount of compensation was not fair to the corporation and its shareholders. The Supreme Court, however, held that total rescission was an improper remedy, and awarded the Plaintiff nominal damages of $1.

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