Tesla Asks Shareholders To Approve $29b Comp Package For Elon Musk Amid ‘ai Talent War’

Tesla has announced a projected compensation package for CEO Elon Musk that would beryllium worthy astir $29 cardinal successful shares, pinch nan institution citing nan “ever-intensifying AI talent warfare and Tesla’s position astatine a captious inflection point” arsenic reasons for nan payout.

The caller scheme will beryllium put to a ballot astatine nan company’s yearly shareholder meeting, which is scheduled for November. It will besides beryllium wholly voided if nan Delaware Supreme Court decides to overturn a judge’s January 2024 decision to onslaught down Musk’s 2018 compensation package because of really it was negotiated down nan scenes.

Musk has threatened to extremity moving connected AI and robotics astatine Tesla unless he gains much power complete nan company. Those threats preceded what is now a multi-million dollar talent warfare among nan biggest companies successful nan artificial intelligence space, on pinch a unreserved of mergers and acquisitions. Musk has simultaneously built up his ain AI institution extracurricular Tesla called xAI, which now owns X, his societal media platform.

Tesla said Monday that its committee of board formed a typical committee earlier this twelvemonth consisting of chairwoman Robyn Denholm and committee personnel Kathleen Wilson-Thompson successful bid to benignant retired a caller package.

The grant they yet decided connected involves giving Musk 96 cardinal shares that will vest successful 2 years, provided that he “serve continuously successful a elder activity domiciled astatine Tesla” during that word and holds nan banal for 5 years. Unlike Tesla’s erstwhile grant to Musk, this caller package does not look to beryllium tied to goals for illustration expanding nan company’s banal price.

At Tesla’s Monday pre-market trading price, that would beryllium worthy astir $29 billion. Musk will person to salary a $23.34-per-share acquisition price, bringing nan full existent worth of nan grant to him to astir $26.7 billion. Depending connected really nan Delaware Supreme Court rules connected Tesla’s appeal, nan package whitethorn beryllium forfeited truthful “there cannot beryllium immoderate ‘double dip,’ according to Tesla.

“Elon will not beryllium capable to support this caller grant successful summation to nan options he will beryllium awarded nether nan 2018 CEO Performance Award should nan courts norm successful our favor,” nan institution wrote.

Tesla said Musk and his relative Kimbal, who is besides a committee member, recused themselves from nan process of constructing this caller compensation package. Musk’s engagement successful nan 2018 compensation package, which was worthy astir $56 billion, was 1 of nan reasons why Delaware Chancery Court judge chancellor Kathaleen McCormick decided to onslaught it down pursuing a proceedings sparked by a shareholder lawsuit.

McCormick said nan process of creating that 2018 scheme was “deeply flawed” because of Musk’s input and his heavy connections to nan group connected Tesla’s board. She besides criticized that scheme for not including immoderate position that would hindrance Musk to Tesla for “any group magnitude of time” — a apt logic for nan two-year promise included successful nan caller plan.

McCormick’s determination caused an uproar among Tesla’s largest fans and galore of its shareholders. It’s besides what inspired nan institution to re-incorporate from Delaware to Texas, a authorities pinch less established shareholder protections written into its laws. Tesla went arsenic acold arsenic holding a shareholder ballot to “re-affirm” nan salary package. But McCormick confirmed her determination successful December 2024, saying nan ballot and Tesla’s ineligible arguments were “unprecedented theories [that] spell against aggregate strains of settled law.”