Tesla’s board has reportedly formed a special committee to reconsider CEO Elon Musk’s salary, possibly paving the way for a revised compensation package amidst mounting legal and investor scrutiny.
This decision follows a Delaware court ruling that invalidated Musk’s substantial $56 billion equity award from 2018.
The committee, which includes Tesla Chairman Robin Denholm and board member Kathleen Wilson Thompson, is still in the early stages of deliberation; specifics about its structure and recommendations are yet to be established, according to sources shared with the Financial Times.
Future equity awards are expected to be linked to performance targets.
So far, Tesla has not commented on these discussions.
Previously, Musk’s awards included 304 million stock options valued at $56 billion at the time the Delaware ruling was issued, earlier in 2024.
These options reached a peak value of $146 billion in December but currently are estimated at around $98 billion based on Tesla’s stock price.
Musk qualified to exercise the options by 2023 after reaching significant growth benchmarks.
The 2018 compensation package was terminated in January by Delaware Premier Cataline McCormick, who criticized the terms, indicating a tough stance on Wall Street practices.
McCormick also nullified subsequent shareholder votes regarding the award.
Musk has indicated plans to devote more time to Tesla, especially after a noticeable drop in the company’s stock, which has fallen about 32% since December.
Despite rumors, the company has denied any intent to replace him as CEO.
The new equity awards for Musk could have substantial financial implications.
However, the reissue option may incur over $50 billion in accounting fees and could subject Musk to a 57% tax rate, given its classification as “money.”
Additionally, Tesla’s board is under scrutiny; several directors agreed in January to return more than $900 million to resolve lawsuits challenging their compensation.
Denholm has sold Tesla stock worth $538 million since 2014.
Wilson-Thompson, a former executive at Walgreens Boots Alliance, previously reviewed Musk’s pay and was the sole member of the earlier committee, due to other board members’ close ties to the CEO.
This year’s annual shareholders meeting for Tesla might be postponed as the board continues to assess its options, which typically occur in May or June.
