Tesla provides Elon Musk with a stock worth $29 billion during an ongoing legal dispute concerning his 2018 compensation package.
Tesla Approves Interim Compensation Package for Elon Musk Worth $29 Billion
Tesla has unveiled a new interim compensation package for CEO Elon Musk, worth approximately $29 billion, as the company awaits a decision from the Delaware Supreme Court on the legality of Musk's previous $56 billion compensation deal.
The new package, consisting of 96 million restricted shares, was approved by Tesla's board, excluding Musk and his brother Kimbal due to conflicts of interest. The shares will cost Musk $23.34 per share, matching the adjusted exercise price of the 2018 award.
The interim package is designed to recognize Musk’s contributions and secure his continued leadership during the ongoing legal dispute. Key conditions include a two-year leadership commitment, a mandatory five-year holding period on the shares, and a provision that if the court ultimately reinstates the original 2018 award, this interim package will be voided to prevent Musk from receiving duplicate compensation.
The new package bypassed a shareholder vote and was approved by Tesla’s board (with Musk and his brother Kimbal recused due to conflicts). It was crafted to address prior judge criticisms of the 2018 plan, such as the absence of term commitments binding Musk to Tesla, by including explicit vesting conditions tied to his role in the company.
Here is a comparison of the key aspects of the 2018 and 2021 compensation packages:
| Aspect | 2018 Compensation Package | 2021 Interim Compensation Package | |--------------------------------|-------------------------------------------|-------------------------------------------------------| | Value | Up to $56 billion | ~$29 billion (96 million restricted shares) | | Legal Status | Voided by Delaware courts; appeal filed | Approved by Tesla board as interim award | | Key Court Concerns | Flawed approval process; lack of independence | Includes term vesting, preventing same flaws | | Conditions | None binding Musk to tenure | 2-year leadership role + 5-year share holding | | Relationship to 2018 Award | Original contested and disrupted | Void if 2018 award reinstated ("no double dip") | | Shareholder Vote | Approved in 2018, reaffirmed in 2024 | No shareholder vote required under existing plan |
This interim compensation package serves as a legal and strategic bridge for Musk’s pay while the Delaware Supreme Court considers the appeal of the original 2018 package’s voiding. The new package comes as Tesla plans to present a broader, long-term CEO compensation strategy for a vote at its upcoming annual shareholder meeting on November 6.
The interim compensation package, worth approximately $29 billion, is linked to Tesla's business operations as it is designed to recognize Elon Musk's leadership in the company during the ongoing legal dispute over his previous $56 billion compensation deal. This new package, consisting of 96 million restricted shares, is structured with technology-driven conditions such as a two-year leadership commitment and a mandatory five-year holding period on the shares, to address prior judgement criticisms about Musk's first compensation package.
