Tesla mulls new Elon Musk pay deal amid court battle
Tesla is contemplating a new pay agreement for its founder and CEO, Elon Musk. According to the "Financial Times," the company's board aims to address the uncertainty surrounding the long-standing legal battle over Musk's substantial bonus. Several proposals are under consideration.
Tesla's board has set up a special committee to devise a proposal for a new compensation package for Elon Musk. The "Financial Times" reports that this move seeks to resolve the prolonged dispute over the 2018 invalidated package, valued at up to $56 million (€50 billion). This package involved stock options as a condition for Musk's additional compensation.
Musk and the Tesla dispute: The court previously blocked the agreement
Tesla and Musk have been involved in a legal dispute over this matter for seven years. In January 2024, a Delaware court determined that the sum Musk was seeking was excessively inflated. The judge also criticized Tesla’s board members, stating that under Musk’s influence, they acted more like obedient servants to a powerful figure than independent decision-makers. As a result of the ruling, the billionaire did not receive the mentioned payout. However, he did not relent, and an appeal was lodged with the Delaware Supreme Court.
The committee assessing Musk's package comprises two individuals: Tesla's Chairwoman Robyn Denholm and Tesla board member Kathleen Wilson-Thompson. The "FT" reports, citing people close to the matter, that the committee is considering both a new stock option package and alternative forms of compensation for Musk's work to date, if the Delaware court does not reinstate the nullified agreement.
The value of the options Elon Musk was supposed to receive peaked at approximately £120 billion. The billionaire has made it clear he desires more control over Tesla. At the beginning of 2024, he stated that without owning at least 25% of the company's shares, he would not be able to shield the company from activists and ensure "responsible AI development." Tesla did not respond to "FT" inquiries on this subject.
According to "Financial Times" sources, several scenarios are under review, although none have been finalised yet. Challenges include the high accounting cost of potentially reissuing the options of over $50 billion (£44 billion) and a possible 57% tax for Musk if the rewards are granted in cash.
