The Delaware Supreme Court has reinstated the 2018 compensation package for Tesla CEO Elon Musk. This decision, announced on 19/12/2024, overturns a lower court's ruling in January 2024 that had deemed the package "unimaginable" and unfair to shareholders.
The compensation agreement from 2018 grants Musk options to purchase 304 million shares, exercisable through 2028. These options are divided into 12 tranches, contingent upon Tesla achieving specific financial performance and market capitalization targets. Originally valued at 56 billion USD in 2018, the package is now worth 139 billion USD, based on Tesla's closing stock price on 19/12/2024.
The Supreme Court explained that the lower court's decision effectively left Musk without compensation for six years of his contributions to Tesla. The CEO does not receive a salary but instead earns stock awards tied directly to the company's operational results. Gene Munster, Director of Deepwater Asset Management and a Tesla investor, stated, "This is a victory for Musk, as he will increase his control faster."
Musk has already received all the options from the 2018 package. If fully exercised, his ownership stake in the electric vehicle company would increase from the current 12.4% to 18.1%. On X, Musk wrote that he had been "vindicated".
 |
Billionaire Elon Musk at Capitol Hill. Photo: AFP |
Billionaire Elon Musk at Capitol Hill. Photo: AFP
Tesla has actively sought to retain its CEO, particularly as the company expands its focus beyond electric vehicles to include self-driving technology and humanoid robots. This year, shareholders approved a new compensation package potentially worth up to 1 trillion USD last month. Furthermore, in August last year, Tesla announced it would award Musk a new stock bonus worth 29 billion USD if the 2018 package was not restored.
According to a company document from September last year, Tesla needs to compete with Musk's other ventures, primarily aerospace company SpaceX and artificial intelligence startup xAI. These companies currently contribute a significant portion of Musk's personal wealth. Tesla explained that offering higher compensation is crucial to ensure Musk remains focused on the company. The company stated, "Most of Musk's wealth currently comes from non-Tesla businesses. He has more attractive options than ever." The new compensation package is designed to prevent the CEO from "prioritizing other companies."
Forbes currently lists Elon Musk as the world's richest person, with an estimated net worth of 679 billion USD. He is also the first individual to possess over 600 billion USD.
