Tesla has rescinded a “temporary” pay package worth $29 billion it gave CEO Elon Musk last year after the Delaware Supreme Court recently reinstated a higher compensation of $56 billion from 2018.
The company granted Musk interim measures in August 2025 to avoid the possibility that the Delaware Supreme Court would reject his appeal. Tesla had told investors that if Musk were to win, the interim package would be null and void. “[T]There can be no ‘double dip’ here,” the company wrote last year.
Sure enough, Tesla acknowledged in its quarterly report filed with the Securities and Exchange Commission on Thursday morning that it significantly increased the preliminary award amount on April 21st. Tesla said its board voted without Musk or his brother, fellow board member Kimbal Musk.
“These actions are consistent with the ‘no double dip’ principle that would prevent Mr. Musk from reaping a windfall if he exercised his 2018 CEO Performance Award,” Tesla said in its filing.
Tesla awarded Musk a $56 billion package in 2018, but shareholders challenged it in court, accusing the CEO of essentially negotiating against him in the design and failing to properly communicate this to shareholders. The case took years to be heard in Delaware Chancery Court, with a judge finally ruling in 2024 that the plaintiffs were right and rescinding the pay package.
Tesla launched a public relations campaign and appealed the judge’s decision to the state Supreme Court. This included a “re-vote” on the package to ostensibly prove that shareholders had not been defrauded. Meanwhile, Musk has threatened to leave Tesla altogether and develop artificial intelligence elsewhere. That led Tesla’s board to come up with a $29 billion hedge and also work on a much larger and more ambitious compensation package worth up to $1 trillion.
The reversal of the interim ruling does not affect Musk’s $1 trillion plan. To get the full amount, Musk will need to lead Tesla to a number of business milestones (including delivering 20 million vehicles and 1 million robots, and putting 1 million robotaxis on the road), raising the company’s valuation to more than $8 trillion over 10 years.
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Interestingly, Tesla explained in its quarterly report that it is starting to make its own estimates of milestones that Musk can and cannot reach. The company did not say which goals it believed Musk would achieve, but wrote that it had “unrecognized stock-based compensation expense of $9.97 billion for operational milestones that were considered likely to be achieved during the award period.”
The company also said it had unrecognized stock-based compensation expense of $105.82 billion to $120.37 billion for “business milestones that were not considered likely to be achieved,” but did not specify which milestones.
Mr. Musk has 10 years to meet all the goals associated with his $1 trillion package, but many of these operational milestones water down promises he made earlier. But Tesla itself doesn’t seem confident that it can do at least some of the deals.
Tesla also explained in the filing that its board has decided to create some barriers to when and how Musk can sell his shares in the now-resurrected 2018 package “to reduce the negative impact of a significant stock sale on our company.”
These limits appear to track some of the more general limits set in the $1 trillion pay package. They require Musk to remain the company’s CEO or head of product development until at least 2028 and hold the stock for five years for the stock to vest.
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