With Elon Musk’s controversial $56 billion Tesla pay package still bundled in court, the electrical automaker approved a $200 billion temporary compensation plan in case he ended up losing the original reward. According to a SEC filing yesterday (August 4), Tesla’s board of directors has authorized Musk to grant a package of 96 million shares of Tesla shares, which will be vested within two years as long as he serves as CEO or holds another key executive role for the company. But if the final court ruling allows him to receive the original $56 billion package in full, the interim ruling will be killed.
What happened to Musk’s $56 billion package so far
January 2018: Tesla’s board of directors and shareholders approved a 10-year, performance-based compensation plan for Musk. The plan includes 12 batches of stock options, with a total potential value of approximately $56 billion if all earned by 2028.
February 2019: A group of Tesla shareholders filed a lawsuit in Delaware (which Tesla was included), which made the approval process of the plan flawed. The case, known as Tornetta v. Musk, is led by shareholder Richard Tornetta.
April 2022: Delaware Court Judge Kathaleen McCormick ruled against Musk and found that the board’s approval of the plan was not independent enough. Tesla and Musk later appealed the ruling.
February 2024: Judge McCormick formally ordered the revocation of the $56 billion compensation plan, ruling that Tesla’s board of directors withheld key information from shareholders before the initial approval vote.
June 2024: At Tesla’s annual shareholder meeting, shareholders voted to reiterate the $56 billion package. They also approved a plan to re-investigate Tesla in Texas Avoid further Delaware judicial challenges.
What’s in the new $29 billion package:
- Options to buy 96 million shares of Tesla common stock
- Stocks are scheduled to be vested on August 3, 2027
- Musk must pay $23.34 per share after vesting, matching the exercise price in his 2018 compensation plan
Elon Musk’s Fortune and Tesla at the Crossroads
Musk exercised stock options in eight of 12 batches in his $56 billion compensation package. The remaining four divisions are related to other milestones, including further growth in Tesla’s market cap and the results of ongoing legal challenges.
He currently owns about 13% of Tesla, or about 410 million shares, which accounts for a quarter of its nearly $400 million net worth. Musk also led at least five other companies, and has recently faced pressure to refocus on Tesla as sales fell and stock prices fell.
