Tesla Shareholders to Vote on $29 Billion Musk Compensation Package Amid voting Rights debate
WILMINGTON, Delaware – August 8, 2024 – Tesla shareholders are preparing to vote on a newly approved $29 billion compensation package for CEO Elon Musk, a move that comes after a Delaware court invalidated his previous 2018 plan. The vote, expected at an upcoming shareholder meeting, is occurring against a backdrop of Musk’s public push for increased voting control within the company, raising questions about corporate governance and the future direction of the electric vehicle and AI giant.
The Road to a New Deal
The current situation stems from a legal challenge brought by shareholders in 2022, arguing that Musk’s 2018 compensation package – initially valued at over $50 billion – was excessive and unfairly benefited him. Delaware Chancery court Judge Kathaleen McCormick sided with the shareholders in January 2024,voiding the original plan. The judge found the board had failed to adequately negotiate the terms of the package and lacked independence due to close ties with Musk.
Following the ruling, Tesla’s board quickly moved to restructure Musk’s compensation. On august 1st, 2024, the board approved a new plan granting Musk 96 million Tesla shares, currently valued at approximately $29 billion (based on a price of $23.34 per share as of today’s market close). This award is contingent upon Musk remaining with Tesla in an executive capacity – either as CEO, overseeing product progress, or managing operations – until August 3, 2027.Musk’s Push for Increased Control
The timing of the new compensation package is intertwined with Musk’s recent calls for increased voting rights.During Tesla’s Q2 2025 earnings call in July 2024, Musk expressed concern about possibly being “ousted by activist shareholders,” particularly as Tesla expands into ambitious new ventures like humanoid robotics with its Optimus program, developed primarily at the company’s Austin, Texas facility.
“I don’t want to find that I’ve got like so little control that I can easily be ousted… I think my control over Tesla should be enough to ensure that it goes in a good direction, but not so much control that I can’t be thrown out if I go crazy,” Musk stated. This statement has been widely interpreted as a strategic effort to pressure the board into granting him greater influence over the company’s future.Board Rationale and Market Reaction
tesla’s regulatory filings emphasize the critical importance of retaining Musk’s leadership. The board argues that Tesla is at a “critical inflection point” and that Musk’s “unique vision and leadership” are essential for transitioning the company beyond its core electric vehicle and renewable energy businesses into the rapidly evolving fields of artificial intelligence, robotics, and related services. The company specifically highlights the potential of its AI initiatives, including the development of its full self-driving (FSD) software and the aforementioned Optimus robot.Interestingly, the market has reacted positively to recent developments. Despite the disbanding of Tesla’s dedicated Dojo supercomputing team – responsible for training AI models for autonomous driving – Tesla’s stock is currently trading nearly 2% higher in early trading today, August 8th, 2024. analysts suggest this indicates investor confidence in Tesla’s overall strategy and Musk’s continued leadership.
Looking Ahead
The shareholder vote on the new compensation package will be a key test of investor sentiment. While the board strongly advocates for its approval, some shareholders may still harbor concerns about the size of the award and Musk’s desire for increased control. The outcome will likely shape the future of Tesla and its ambitious plans for the coming years, impacting not only the electric vehicle industry but also the broader landscape of AI and robotics.About the Author: Mohit Oberoi is a freelance finance writer with over 15 years of experiance in financial markets. He holds an MBA in Finance and has authored over 7,500 articles covering global markets, electric vehicles, tech stocks, and personal finance.
