Denmark's arbitration court concluded that Eldrup had not breached his contract by awarding bonuses that were deemed unusual by the company's board of directors to four employees in the wind division.
As such the refusal of the company to honour Eldrup's severage agreement in 2012 was deemed unjustifiable.
At the time of his firing, Dong commissioned law firm Norrbom Vinding to conduct a legal investigation into whether Eldrup had breached his duties by agreeing bonuses worth 90% of some employees' salaries, concluding that he had indeed acted inappropriately.
As a result, Dong decided to pay Eldrup a year's wages, but not the DKK 8.7 million severance package his contract allowed for.
However, the court contradicted Dong's findings and ruled that Eldrup acted in the best interests of the company in awarding the bonuses in order to hold on to valuable members of staff in the wind division.
A report by the National Audit Office had previously found that the cost of management and administration had been reduced during Eldrup's time at the helm and that management executives — including those in the wind division — had received lower wages than in other, comparable energy companies.
The exact details of the case do not have to be released under Danish law, with Dong required to give approval if they are to see the light of day.
The Danish Association of Lawyers and Economists, which represented Eldrup, said in a statement on his behalf: "I am delighted and very pleased with the outcome. I have never doubted that I have acted properly and in accordance with Dong's interests.
"Much has been said and written about the case. Now I can put it behind me and focus on the many new activities I have involved myself in following my parting with Dong."
Eldrup was well thought of in the wind industry for refocusing the company's energies away from oil and gas towards renewable sources, making Dong the world's biggest developer in the offshore wind sector.