Elon Musk Granted Controversial $29 Billion Pay Package by Tesla Board, Despite Delaware Ruling and Absence of Shareholder Vote

In an interview on CNBC’s “Squawk Box,” Kimbal Musk, the younger brother of the world’s most affluent individual, expressed his belief that Elon Musk deserves compensation. The comment came amidst Tesla’s ongoing legal dispute concerning Elon Musk’s remuneration package as CEO.

“I believe my brother is entitled to be compensated,” Kimbal Musk stated on Friday. “For the past six to eight years, he hasn’t received a salary or cash bonuses. I think that’s unfair. The shareholders can make that decision, but I do believe it’s necessary. He needs to be paid.”

Unlike traditional salaries and cash bonuses, Elon Musk’s compensation at Tesla consists of “performance awards” in the form of valuable stock options. These options are granted upon Tesla achieving specified milestones.

Earlier this month, Tesla awarded Elon Musk an “interim” remuneration package comprising 96 million shares, valued approximately at $29 billion. The package includes shares that will vest in two years if he continues as CEO or in another key executive position.

The pay plan received approval from a special committee of the Tesla board, with Elon Musk and Kimbal Musk recusing themselves. Board members Robyn Denholm and Kathleen Wilson-Thompson detailed this in an August 4 letter to shareholders.

This award followed a Delaware court’s ruling in December that revoked Elon Musk’s $56 billion remuneration package from 2018, the largest compensation plan for a public company executive in U.S. history.

Before the Delaware judgment on his 2018 pay package, Musk had expressed a desire for even higher compensation and greater control over Tesla in a post on X, formerly known as Twitter, in January 2024.

“I am uneasy about leading Tesla to become a leader in AI & robotics without holding approximately 25% voting control,” Musk wrote at the time. “Enough to be influential, but not so much that I can’t be overturned. Unless that is the case, I would prefer to develop products outside of Tesla.”

Beyond Tesla, Musk was already engaged in product development, including at his latest artificial intelligence venture, xAI, established in Nevada in March 2023.

The new remuneration package was granted to Musk without a shareholder vote and will only apply if Tesla and Musk lose the appeal in Delaware.

An investment group working with pension funds, the SOC Investment Group, recently sent a letter to Nasdaq requesting an investigation into Tesla, arguing that the board should have sought shareholder approval for the new package under Nasdaq listing policies.

In their August letter to shareholders announcing the interim remuneration package, Tesla board members Denholm and Wilson-Thompson stated that the special committee is working on a longer-term CEO compensation strategy, which they plan to present to shareholders at Tesla’s upcoming annual meeting in November.