Tesla’s board is reconsidering CEO Elon Musk’s pay package at the company. It seems the embattled tech billionaire who has been busy laying off thousands of federal employees from D.C. and has struggled to be on top of disastrous launches at SpaceX, has lost the confidence of his fellow board members at Tesla.
According to Financial Times (FT), Tesla’s board created a new “special committee” to explore a new CEO pay package for Musk. FT reveals that the committee is exploring new stock options and “alternative ways” to compensate Musk if Tesla fails to reinstate his 2018 compensation package, which was rescinded by a judge who found that Musk negotiated the deal with a board under his control and then misrepresented it to shareholders.
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A Delaware judge in 2024, denied Elon Musk’s $56 billion Tesla pay package, ruling it was unfairly approved due to board members’ close ties to Musk and a flawed negotiation process. The court found the Tesla board lacked independence and failed to act in shareholders’ best interests. Even though shareholders had voted to approve the package, the judge emphasized that proper governance procedures must still be followed. Following the ruling, Tesla formed a special committee to reassess Musk’s compensation.
The board, led by Robyn Denholm and Kathleen Wilson-Thompson, is exploring a new performance-based package, though no final decision has been made. Musk has warned that he may scale back his involvement in Tesla, especially in AI development, if his influence or compensation is not secured. The case has reignited debates about executive pay, corporate governance, and the balance of power between charismatic CEOs and the boards meant to oversee them.
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Tesla’s board considering a new pay package for Musk reflects the company’s need to retain one of its most influential and visionary leaders while ensuring proper corporate governance.
Tesla must now create a compensation plan that meets legal standards and aligns with shareholder interests. The process also involves making sure the board acts independently, avoiding conflicts of interest that led to past legal challenges. At the same time, the package must be attractive enough to keep Musk committed to Tesla, especially in areas like artificial intelligence and robotics. Ultimately, the goal is to balance accountability with incentive, supporting Tesla’s long-term growth while addressing concerns about executive power.