Proposal includes 96 million shares vesting over two years and hinges on court decision over Musk’s 2018 compensation plan
Tesla has proposed a new compensation package for CEO
Elon Musk valued at approximately twenty-nine billion dollars in stock, pending shareholder approval at the company's upcoming annual meeting scheduled for November.
The package involves the grant of ninety-six million shares that would vest over two years if Musk remains in a senior leadership role and holds the shares for an additional five years.
The proposed award would be nullified if the Delaware Supreme Court reinstates Musk’s previously voided 2018 compensation plan, which was struck down by the Delaware Chancery Court in January 2024 due to concerns about the negotiation process.
The court found that Musk had extensive influence over board members involved in the earlier deal and that the plan lacked terms binding him to
Tesla for any specified duration.
Tesla’s board formed a special committee, led by Chairwoman Robyn Denholm and board member Kathleen Wilson-Thompson, to design the new package.
Musk and his brother,
Tesla board member Kimbal Musk, recused themselves from the process.
The new stock award does not include performance goals related to stock price increases, unlike the 2018 plan.
Musk would be required to pay approximately twenty-three dollars and thirty-four cents per share to exercise the options, bringing the current net value of the package to around twenty-six point seven billion dollars.
Tesla stated that the new award will not be granted in addition to the 2018 compensation package if the court rules in favor of reinstating the original plan, to prevent what the company called a “double dip.”
The proposal comes amid a competitive landscape for artificial intelligence talent and Musk’s increasing involvement in external ventures, including his AI company xAI, which owns the social media platform X.
Musk has previously suggested he may scale back work on AI and robotics at
Tesla unless he gains more control over the company.
The Delaware Chancery Court’s January ruling, delivered by Chancellor Kathaleen McCormick, criticized the earlier process as “deeply flawed.” She reaffirmed her decision in December 2024, dismissing
Tesla’s attempt to ratify the plan through a shareholder vote and labeling the company’s legal rationale as inconsistent with established precedent.
Following the court’s rejection,
Tesla initiated steps to reincorporate in Texas, citing differences in shareholder rights protections.
The shareholder meeting in November is expected to determine whether the new package moves forward, depending on the court’s pending decision.