- Tesla awarded Musk 96 million shares worth $29 billion as interim compensation.
- The deal ensures the CEO remains with Tesla for at least the next two years.
- Musk cannot collect both this and the 2018 package if courts reinstate the latter.
Earlier this year, two Tesla board members joined a special committee with a singular mission: figure out how to “retain and incentivize Elon.” After several months of deliberation, the solution has come into focus. It wasn’t a brainstorming session or a bold new vision, it was $29 billion. In cash-equivalent stock. Turns out, when it comes to keeping Elon Musk engaged, nothing speaks louder than a mountain of money.
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Before we get too far along, don’t forget that in 2018, a Delaware court struck down a $50 billion pay package to CEO Elon Musk. It said that there were issues in the board approval process and that it was unfair to investors. Musk has appealed the ruling, but in the interim, Tesla and its board just approved a new $29 billion pay package.
What’s in the Package?
The award consists of 96 million shares of Tesla, granted to Elon as a ‘good faith’ payment. The committee is also working on a long-term CEO payment plan that it’ll put to a shareholder vote on November 6. Regardless of how things come out, this interim pay package ensures that Musk remains a part of Tesla leadership for at least two years. If he were to leave before that, he would lose it.
As Bloomberg points out in its coverage, Musk has already committed to staying on with Tesla for at least five more years. According to the board, this move is all about satisfying Elon’s personal desire to have increased voting rights.
In a post on X, the company explained: “This interim award is structured to incrementally increase his voting rights upon grant, which he has repeatedly told us—and shareholders have confirmed—is an important part of incentivizing him to stay focused on the critical work we are doing here at Tesla.”
No Overlap With the 2018 Package
Importantly, the Tesla board made it clear in no uncertain terms that Musk won’t get this pay package and the 2018 one if the courts reverse their ruling.
“If the Delaware courts fully reinstate the 2018 CEO Performance Award, this interim award will be forfeited or returned or a portion of the 2018 CEO Performance Award will be forfeited,” it wrote in a letter to shareholders. “To put it simply, there cannot be any “double dip.” Elon will not be able to keep this new award in addition to the options he will be awarded under the 2018 CEO Performance Award should the courts rule in our favor.
As of this writing, Musk hasn’t commented on the package, though knowing his usual online habits, it’s entirely possible he’s saving his thoughts for a meme, a Mars reference, or a reply to someone asking about Dogecoin. Subtlety was never really his thing.
