Tesla’s board of directors has announced a new compensation package worth around $29 billion by CEO Elon Musk. The company cites “always enhanced AI talent war and Tesla status” as a reason for its payments.
The large pay package is not voted because it is allocated through the 2019 equity incentive plan already approved by shareholders, according to Anlipton, an professor at the University of Colorado Law School. Tesla has said it will vote on a “long-term CEO compensation strategy” for the company’s annual shareholders meeting scheduled for November.
Musk’s new compensation plan would be completely void 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. That paid package was worth around $56 billion.
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.
At the same time, Musk built his own AI company called Xai, other than Tesla. This currently owns his social media platform, X. This happened while Tesla’s sales growth had faded and its brand was undermined by Musk’s involvement in the Trump administration.
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.
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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.
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 one of the reasons Premier Delaware Court judge Cataline McCormick decided to defeat 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 arguments were “unprecedented theory.” [that] Opposes multiple stocks of the resolved law. ”
Update: This story and headline have been updated to reflect that the award has been approved by Tesla’s board of directors and no shareholder vote is required.
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