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Musk’s original stock award plan, approved in 2018, was worth $55.8 billion over ten years. At that time, Tesla’s board aimed to retain Musk at the company while he focused on other ventures like artificial intelligence and space exploration. However, a shareholder lawsuit argued that the board had breached its fiduciary duties.
In 2024, a judge declared Musk’s pay package excessive and misleading in proxy statements. Following this decision, Musk relocated Tesla to Texas. The shareholders later reaffirmed the package with 77% approval.
The court questioned whether Musk’s significant stake in Tesla exerted undue pressure on shareholders to approve the deal. This led to concerns that shareholders might have been intimidated by him or had voted in favor due to his status as an executive.
Despite ongoing legal challenges, Tesla decided to award Musk another $29 billion stock package. This new grant will vest over two years and is contingent upon either Musk serving as CEO or being responsible for product development. The award’s continuation depends on the outcome of pending court cases related to the original lawsuit.
Crucially, the new package includes a “no double dip” clause. If the court rules in favor of Musk regarding his 2018 award, he must return any excess shares from the 2025 grant. Additionally, if the court awards him the 2018 award after the 2025 grant has vested, he must repay the excess shares to Tesla. The executive also retains the option to forfeit his 2018 award under these conditions.
