The company’s board of directors will now decide whether to appeal the decision, change where Tesla is incorporated or negotiate a new pay package.
Shareholders had sued, arguing that Mr. Musk’s compensation — which helped make him the world’s richest person — was excessive.
The billionaire chief executive testified about a multibillion-dollar compensation package the electric car company’s board put in place in 2018.
A shareholder is asking the court to void a 2018 compensation package that has paid the chief executive nearly $50 billion.