Tesla Board Establishes Special Panel to Examine Elon Musk's Compensation Package, According to NewsSources
Tesla's Special Committee Reviews New Compensation Package for Elon Musk
In response to the Delaware court's decision to invalidate Elon Musk's record-breaking 2018 stock award, Tesla's board has formed a special committee to consider a new compensation package for the CEO. The committee, consisting of Robyn Denholm and Kathleen Wilson-Thompson, is tasked with exploring a fresh stock package or other forms of compensation for Musk.
The new deal, if approved, would act as an alternative compensation method, particularly if the Delaware Supreme Court ultimately upholds the invalidation of the 2018 plan. According to reports, the new package includes 96 million Tesla shares at an exercise price of $23.34 per share, mirroring the conditions of his voided 2018 award.
To receive the full award, Musk must remain with Tesla for two years as either CEO or in a senior executive role related to product development or operations. He must also hold the shares until August 3, 2030, except for covering tax obligations or purchasing the shares.
The committee's discussions are still in the early stages, and no decision has been made. However, the news about the committee's formation suggests potential changes in Musk's compensation at Tesla. The purpose of the committee is to ensure Musk's continued leadership at Tesla, particularly in key areas like AI and robotics, and to maintain his commitment to the company as it competes in rapidly evolving markets.
The court's decision on Musk's 2018 stock award has created uncertainty regarding his role at Tesla. The original stock package, once worth up to $146 billion, was ruled excessive by a judge in January 2024. The Delaware Supreme Court's decision not to reinstate the original stock deal is being considered by the committee.
Major investors have been contacted for their views on Musk's leadership and pay. Tesla's board aims to retain Musk's focus on key areas like AI and robotics, and the deal is seen as crucial to maintaining Musk's commitment to the company.
The special committee's formation was reported by the Financial Times, and the news about the committee was based on information from people familiar with the matter. The report suggests that the shareholder meeting may be postponed to allow the committee more time. Tesla has delayed its annual proxy filing, potentially postponing its shareholder meeting.
The committee's actions are not limited to reinstating the specific 2018 award that was struck down by the Delaware court. Any future stock award for Musk would depend on financial, operational, and stock performance targets. The committee's review does not involve the original 2018 stock award.
The court's decision on Musk's 2018 stock award has left uncertainty about Musk's future at Tesla. However, the formation of the special committee indicates Tesla's commitment to retaining Musk's leadership and ensuring his continued focus on key areas of the company. The committee's decision will be closely watched by investors and stakeholders alike.
The new compensation package for Elon Musk, if approved by Tesla's special committee, could be a mix of stock and other forms of compensation based on his performance in key business areas such as AI and robotics. If the Delaware Supreme Court upholds the invalidation of the 2018 plan, technology will play a significant role in determining future compensation for Musk.
