Tesla’s board has granted CEO Elon Musk an interim compensation package worth approximately $29 billion, consisting of 96 million shares, according to a filing released Monday.
The shares will vest over two years, contingent on Musk maintaining his role as CEO or another key executive position. However, the award will be forfeited if Musk wins the ongoing legal dispute over his 2018 compensation package, which was valued at $56 billion at the time it vested.
Tesla shares rose over 2% following the announcement.
Legal Disputes Cast Shadow Over Compensation
In January, Delaware Chancellor Kathaleen McCormick upheld a ruling that found Musk’s 2018 CEO pay plan was improperly granted. The court determined Tesla’s board had withheld critical information from shareholders before seeking approval for the plan.
Following the ruling, Musk launched a campaign opposing Delaware’s legal framework and moved Tesla’s incorporation to Texas. Tesla appealed the decision, and the case now awaits judgment from the Delaware Supreme Court.
Musk currently owns about 13% of Tesla’s outstanding shares, and his control over the company remains a hot topic among investors and the public.
In early 2024, Musk expressed discomfort with Tesla’s AI and robotics ambitions unless he secured roughly 25% voting control. Public filings reveal that Musk founded AI company xAI in March 2023 without disclosing it to Tesla shareholders. xAI, the parent of social media platform X, develops AI products integrated with Tesla vehicles, such as the Grok chatbot.
Board Approval and Outside Activities
The interim pay plan was approved by a Tesla board special committee led by Chair Robyn Denholm and Director Kathleen Wilson-Thompson. The plan allows Musk to pursue outside ventures, including political work.
Last year, Musk took leave from Tesla to support President Donald Trump’s reelection and later worked in the administration as a special government employee leading the DOGE initiative, which aimed to cut federal agency costs.
His political involvement sparked consumer backlash, negatively affecting Tesla’s sales and reputation in the U.S. and Europe. Following a public disagreement with Trump, Musk announced last month that he has formed a new political party.
Tesla’s recent earnings report showed a decline in sales for the second consecutive quarter, with automotive revenue falling 16%. On a call with analysts, Musk acknowledged challenges ahead, including the impending loss of EV tax credits.
“We probably could have a few rough quarters. I am not saying that we will, but we could,” Musk said.
Tesla’s next annual shareholder meeting is scheduled for November.
What The Author Thinks
Granting Elon Musk such a massive interim pay package amid ongoing legal disputes and recent financial setbacks raises questions about governance and shareholder interests. While Musk’s vision and influence have driven Tesla’s growth, the company risks appearing overly reliant on one individual. Balancing rewarding leadership with prudent oversight is critical, especially as Tesla faces both operational and reputational challenges in a competitive EV market.
Featured image credit: Heute
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