Tesla’s board of directors has approved a new compensation package for CEO Elon Musk worth about $29 billion in company shares. The company said the move comes as the “AI talent war” intensifies and Tesla faces a crucial moment.
This pay package uses a 2019 Equity Incentive Plan that shareholders already approved, so it will not require a new vote. Tesla plans to propose a longer-term CEO pay strategy at its annual shareholder meeting in November.
The new package gives Musk 96 million shares that will vest after two years, provided he remains in a senior leadership role. Musk must also hold the shares for five years. Unlike a previous deal, this package does not tie Musk’s pay to stock price goals.
However, the package could be canceled if the Delaware Supreme Court overturns a judge’s earlier ruling that struck down Musk’s 2018 compensation plan. That earlier plan, worth $56 billion, was criticized for being negotiated with Musk’s heavy involvement behind the scenes.
Musk has recently threatened to stop Tesla’s AI and robotics projects unless he gains more control. He has also started his own AI company, xAI, which now owns the social media platform X. Meanwhile, Tesla’s sales growth has slowed, and Musk’s political activities have affected the company’s image.
Tesla said Musk and his brother Kimbal, a board member, did not take part in designing the new pay package. The 2018 plan was ruled “deeply flawed” by a Delaware judge because of Musk’s influence and lack of binding terms.
The judge’s ruling sparked controversy among Tesla fans and shareholders. It also led Tesla to move its incorporation from Delaware to Texas, where shareholder protections are weaker. Despite Tesla’s attempt to reaffirm the 2018 plan by shareholder vote, the court upheld its decision.
Tesla says the new award will not allow Musk to receive double compensation if the 2018 plan is upheld. The current value of the shares granted is about $26.7 billion, based on Tesla’s stock price before market open on Monday.
