Tesla’s board of directors has announced the proposed compensation package for CEO Elon Musk. CEO Elon Musk is worth around $29 billion in stock.
The new plan will be voted at the company’s annual shareholders meeting scheduled for November. And if the Delaware Supreme Court decides to overturn the judge’s January 2024 decision to defeat Musk’s 2018 compensation package because of how it was negotiated behind the scenes, it would be completely void.
Musk is threatening to halt AI and robotics work at Tesla unless the company gains more control. These threats preceded the rush of mergers and acquisitions, along with a multi-million dollar talent war among large companies in the artificial intelligence field. Musk simultaneously built his own AI company called Xai, apart from Tesla. This currently owns his social media platform, X.
Tesla said Monday that the board has established a special committee consisting of Chairman Robin Denholm and board member Kathleen Wilson Thompson to organize the new package.
The awards they ultimately decided include giving away 96 million Musk shares that will grant the rights two years later. Unlike Tesla’s previous awards for Musk, this new package doesn’t seem to be tied to goals like raising the company’s stock price.
Tesla’s pre-market trading price on Monday is worth around $29 billion. Musk will have to pay a purchase price of $23.34 per share, bringing him the current total of the award to about $26.7 billion. According to Tesla, depending on how the Delaware Supreme Court controls Tesla’s appeal, the package could be confiscated as “no double dip.”
“Elon cannot maintain this new award, in addition to the options that will be awarded under the 2018 CEO Performance Award, if the court controls us in our favour,” the company writes.
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Tesla said Musk, who is also a member of the board, and his brother Kim Baru, rejected himself from the process of building this new compensation package. Musk’s involvement in the 2018 compensation package was worth around $56 billion, but this was one of the reasons why Delaware Prime Minister’s Court judge, Premier Cataline McCormick, decided to beat it following the trial caused by a shareholder lawsuit.
McCormick said the process of creating the plan for 2018 was “deeply flawed” due to mask input and deep connections with people on the Tesla board. She also criticized the plan to not include conditions for tie the mask to Tesla for “every time.”
McCormick’s decision sparked a fuss among Tesla’s biggest fans and many of its shareholders. It also encouraged Delaware to reincorporate it into Texas. Tesla has “reviewed” its pay package, retaining shareholder votes. However, McCormick confirmed her decision in December 2024, saying that the vote and Tesla legal argument “an unprecedented theory (it) is contrary to multiple stocks in the Settlement Act.”
