Tesla’s board of directors has established a special committee to explore a new compensation package for CEO Elon Musk, as the company grapples with the fallout from a court ruling that voided his record-breaking 2018 pay agreement.
The two-person committee, comprising board chair Robyn Denholm and director Kathleen Wilson-Thompson, is tasked with developing potential new stock options or alternative compensation for Musk. This review comes after Delaware’s Chancery Court struck down the 2018 package—once valued at $56 billion—earlier this year, citing governance failures and conflicts of interest in its approval.
Tesla confirmed the formation of the committee in a recent regulatory filing, though details were sparse. According to reports from the Financial Times, the committee is also considering backpay solutions should the Delaware Supreme Court uphold the original ruling. The decision is expected later this year.
Musk’s previous compensation deal, which granted him 304 million stock options contingent on aggressive financial milestones, had already been re-approved by shareholders in June 2024. However, the court rejected its reinstatement, criticizing the board for prioritizing Musk’s interests over fiduciary duties to shareholders.
Complicating matters is Tesla’s corporate shift. Following its 2024 reincorporation in Texas, any new pay package would be governed by Texas law, not Delaware’s. The special committee has engaged law firm McDermott Will & Emery, known for its Texas corporate law expertise, to advise on the matter.
The board is under pressure from multiple fronts. Investors are concerned not only about Musk’s compensation but also his divided attention. His leadership of social media platform X, artificial intelligence firm xAI, and his recent role within the Trump administration’s Department of Government Efficiency have raised questions about his focus on Tesla.
The timing of Tesla’s annual shareholder meeting, typically held in May or June, could be delayed to accommodate these deliberations. Any new compensation package would require shareholder approval.
