Tesla seeks shareholder approval for $29B Musk pay amid AI talent battle
▼ Summary
– Tesla’s board proposed a $29 billion compensation package for Elon Musk, citing the AI talent war and Tesla’s critical inflection point as justification.
– The package will be voted on at Tesla’s November shareholder meeting but could be voided if the Delaware Supreme Court overturns a 2024 ruling against Musk’s 2018 pay plan.
– Musk threatened to halt AI and robotics work at Tesla unless he gains more control, amid a broader AI talent war and his parallel development of xAI.
– The new package grants Musk 96 million shares vesting in two years, contingent on his continuous leadership and a five-year holding period, without stock price targets.
– Tesla’s board formed a special committee to design the package, excluding Musk and his brother, after a 2018 plan was struck down for being “deeply flawed” due to Musk’s influence.
Tesla is asking shareholders to approve a massive $29 billion stock award for Elon Musk, framing the compensation as essential for retaining leadership in the competitive AI sector. The proposal comes as Musk has openly threatened to shift his focus away from Tesla’s artificial intelligence and robotics projects unless he gains greater control over the company’s direction.
The board’s special committee, led by chairwoman Robyn Denholm and director Kathleen Wilson-Thompson, crafted the new package after months of deliberation. If approved, Musk would receive 96 million Tesla shares, vesting over two years, contingent on his continued leadership role and a five-year holding period. Unlike his previous 2018 pay deal, which was tied to market performance, this award has no financial milestones attached.
At current share prices, the package would be worth roughly $29 billion, though Musk must pay $23.34 per share, reducing its immediate value to around $26.7 billion. However, the entire deal could collapse if Delaware’s Supreme Court upholds a lower court’s decision to void Musk’s earlier $56 billion compensation plan. Tesla emphasized that Musk cannot “double dip”, if the courts reinstate the 2018 award, this new package will be canceled.
The legal battle stems from a shareholder lawsuit that successfully challenged Musk’s 2018 pay, with Judge Kathaleen McCormick ruling the negotiation process was “deeply flawed” due to Musk’s influence over Tesla’s board. Her decision prompted Tesla to relocate its incorporation from Delaware to Texas, a state with more lenient corporate governance laws. Despite a symbolic shareholder vote backing Musk’s original package, McCormick reaffirmed her ruling late last year, dismissing Tesla’s arguments as legally unsound.
Meanwhile, Musk has expanded his AI ambitions beyond Tesla, launching xAI and acquiring social platform X. His dual roles have fueled concerns about conflicts of interest, even as Tesla positions itself at the forefront of AI-driven innovation. With the AI talent war intensifying, the company argues that securing Musk’s long-term commitment is critical, but shareholders must weigh whether the staggering payout aligns with their interests. The vote is set for Tesla’s annual meeting this November.
(Source: TechCrunch)
