Chancellor Kathaleen McCormick of the Delaware Court of Chancery ruled that Elon Musk’s pay package at Tesla was excessive and rescinded it, a decision that surprised investors and raised doubts about Musk’s future at the company. Musk responded on X, stating that “shareholders should control company votes, not judges.”

Tesla, in turn, announced on X that it would appeal the ruling, arguing that the judge overruled the majority of shareholders. The appeal could take up to a year to resolve. Tesla also argued that a vote by shareholders in June, which supported Musk's compensation, should be recognized.

McCormick, however, stated that the board was not allowed to "reset" Musk’s pay package, emphasizing that ratification votes like Tesla's had to occur before the trial and could not involve a conflicted controller. Musk, who played a central role in the pay negotiations, was deemed to have controlled the process.

Although the pay package was initially valued at up to $56 billion, it is now worth approximately $101 billion following a 42% surge in Tesla’s stock since Nov. 5. The ruling also comes as Musk supports Trump’s efforts to streamline government spending, a role that would allow him to keep his leadership position at Tesla and other companies.