With Elon Musk’s controversial $56 billion Tesla pay package still tied up in court, the electric carmaker has approved a $29 billion interim compensation plan in case he ultimately loses the original award. According to an SEC filing yesterday (Aug. 4), Tesla’s board has authorized a package granting Musk 96 million shares of Tesla stock, which will vest in two years as long as he remains CEO or holds another key executive role at the company. However, if a final court ruling allows him to fully receive the original $56 billion package, the interim award will be voided.
What’s happened to Musk’s $56 billion package so far
January 2018: Tesla’s board and shareholders approved a 10-year, performance-based compensation plan for Musk. The plan included 12 tranches of stock options with a total potential value of roughly $56 billion if fully earned through 2028.
February 2019: A group of Tesla shareholders filed a lawsuit in Delaware—where Tesla is incorporated—alleging the plan’s approval process was flawed. The case, known as Tornetta v. Musk, was led by shareholder Richard Tornetta.
April 2022: Delaware Chancery Court Judge Kathaleen McCormick ruled against Musk, finding that the board’s approval of the plan was not sufficiently independent. Tesla and Musk later appealed the ruling.
February 2024: Judge McCormick formally ordered the $56 billion compensation plan to be rescinded, ruling that Tesla’s board withheld key information from shareholders ahead of the original approval vote.
June 2024: At Tesla’s annual shareholder meeting, shareholders voted to reaffirm the $56 billion package. They also approved a plan to reincorporate Tesla in Texas to avoid further Delaware judicial challenges.
What’s in the new $29 billion package:
- Options to purchase 96 million shares of Tesla common stock
- The shares are scheduled to vest on Aug. 3, 2027
- Musk must pay $23.34 per share upon vesting, matching the exercise price from his 2018 compensation plan
Elon Musk’s fortune and Tesla at a crossroads
Musk has exercised stock options from eight of the 12 tranches in his $56 billion compensation package. The remaining four tranches are tied to additional milestones, including further growth in Tesla’s market capitalization and the outcome of ongoing legal challenges.
He currently owns about 13 percent of Tesla, or roughly 410 million shares—a stake that accounts for about a quarter of his nearly $400 billion net worth. Musk, who also leads at least five other companies, has recently faced pressure to refocus on Tesla amid declining sales and a falling share price.
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