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Tesla (NASDAQ:TSLA) may be lining up a fresh pay package for CEO Elon Musk as its board convenes a special committee to review and potentially restructure his compensation, the Financial Times reports.
The groupled by Chair Robyn Denholm and HR veteran Kathleen Wilson-Thompsonis still in early deliberations, and no decision has been made on the form or size of any new equity grant. Any options would hinge on Tesla meeting ambitious operational, financial and share-price targets, people familiar with the discussions say.
This isn't Tesla's first rodeo with Musk's pay. In 2018, shareholders approved a performance-based plan valued at $56 billionthe largest executive award in historyonly for a Delaware court to void it in January 2024 as excessive. Judge Kathaleen McCormick called the board supine servants of an overweening master, a ruling later upheld on appeal despite a shareholder push to reinstate the award.
Musk has since appealed again, arguing legal errors in the court's decision, and if that fails, any new package would almost certainly need explicit shareholder approval. While uncertainty remains, a retooled compensation plan could align Musk's incentives with Tesla's next wave of growththink full self-driving rollout and ramped battery productionwithout reigniting blowback over governance or dilution.
Investors should be alert to how this committee balances performance hurdles with shareholder expectations, especially given Tesla's valuation leap since 2018. A revamped CEO package could reshape Tesla's incentive structure, impact share count and test investors' appetite for high-stakes governance decisions.
Investors will be watching committee updates, Musk's appeal outcome and any proxy-vote filings ahead of Tesla's annual meeting to gauge whether a new deal is on the horizon.
This article first appeared on GuruFocus.