Tesla's Board Okays $30 Billion Alternative Compensation Plan for Musk

Tesla Approves $30 Billion Compensation Plan for Elon Musk Amid Legal Uncertainty

Tesla's board has sanctioned a new compensation plan worth nearly $30 billion for CEO Elon Musk, reflecting ongoing legal challenges concerning his previous $56 billion pay agreement, which was nullified by a Delaware judge. This decision comes as the company continues to seek court validation of the original compensation structure. The recently disclosed plan, valued at $29.1 billion as of the latest market close, was filed with the Securities and Exchange Commission on Monday. Tesla aims to incentivize Musk to maintain focus on the company while the original pay deal, agreed upon in 2018, is under judicial review. The new arrangement must receive approval from Tesla's shareholders and serves as an alternative compensation option should the court ultimately reject the initial agreement. The new compensation offer includes 96 million shares of Tesla common stock, available to Musk at an exercise price of $23.34 per share, provided he remains with the company in a leadership role until August 3, 2027. Notably, this share grant mirrors the terms of his earlier compensation package and comes with a mandatory five-year holding period, except to cover taxes or share purchase costs. Challenges to Musk's initial pay plan arose in June 2018 when a Tesla shareholder contended that the approval vote was invalid. In rulings made by Judge Kathaleen McCormick of the Delaware Chancery Court (Tornetta v. Musk), she determined that the plan was void due to "extensive ties" between Musk and the Tesla board at the time of negotiation. The judge's assertions imply that Musk, as a minority owner, wielded sufficient influence to suggest that he should be treated as a controlling shareholder, subject to higher legal standards. The Delaware Supreme Court is currently reviewing the case, but no timetable for a ruling has been established. Further complicating matters, Musk's focus has been divided among multiple ventures including SpaceX and X.com (formerly Twitter), along with more recent undertakings like the Boring Company. His balancing act has raised questions about the time and attention he can dedicate to Tesla amidst these ongoing pursuits.