Elon Musk began his appeal to reinstate his £43 billion compensation package from Tesla, arguing that a judge made several legal errors when revoking the record-breaking payout. While he argued that despite the 2018 pay package leading to significant growth for his electric vehicle manufacturer, the lower Court of Chancery deemed it unfair to shareholders. This was despite shareholders voting twice in favour of the plan.

In January 2024, Chancellor Kathaleen McCormick revoked the stock options pay package, labelling it “unfathomable”. She argued it was unjust to Tesla shareholders as the directors who approved it were indebted to Mr Musk, and Tesla failed to disclose crucial information to investors before they voted in favour of it. Despite receiving shareholder approval for the pay package for a second time in June, the judge dismissed this as grounds for overturning her decision.

The pay package had granted Musk the option to purchase approximately 303 million Tesla shares at roughly £17 each, provided the company achieved certain performance and valuation targets. Tesla’s stock closed on Tuesday at £177.85.

Tesla has suggested that creating a new pay package of similar value could result in a charge of £19 billion.

Mr Musk is pushing for a greater stake in Tesla, warning that he might develop products outside of the company if his demands aren’t met.

The timing is crucial, as Tesla’s stock has plummeted in recent weeks, marking a 53% drop since December.

In a recent appeal, Mr Musk and fellow defendants argued that McCormick applied an excessively stringent legal standard, known as entire fairness, when assessing the 2018 pay package.

According to the brief, McCormick mistakenly concluded that Mr Musk, who held 21.9% of Tesla’s stock at the time, controlled the pay negotiations.

She also incorrectly categorised ordinary business relationships among directors as conflicts of interest and unfairly faulted Tesla’s pre-vote disclosures in 2018.