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Tesla (TSLA) has formed a special committee to review Elon Musk’s pay, a move that could lead to the creation of a stock option package — or another workaround to reward the CEO, whose previous $56 billion compensation deal was struck down in court earlier this year.
The Financial Times, citing sources familiar with the matter, reported Wednesday that the committee — made up of board chair Robyn Denholm and director Kathleen Wilson-Thompson — is weighing whether to offer Musk a stock-based pay package as questions mount over his commitment to the electric vehicle company.
Musk, who technically hasn’t been paid for his work as CEO in years, threatened to walk in early 2024 unless his control of the company increased. He currently owns about 13% of Tesla, and the now-voided 2018 package would have boosted that to over 20%.
The move to create a committee comes as Tesla scrambles to resolve the legal and leadership uncertainty surrounding Musk’s role after the record-breaking compensation deal was voided. The panel’s formation was quietly disclosed last month in a single line in a regulatory filing, after which several major investors began reaching out to share their views on Musk’s leadership and future at the company.
Shareholder pressure has intensified amid Tesla’s slumping EV sales, a plunging stock price (down 32% since December), and Musk’s controversial political entanglements with the Trump administration, where he heads the controversial Department of Government Efficiency.
On the company’s latest earnings call, Musk attempted to calm nerves by pledging to devote “far more of my time to Tesla.” Rumors of the board looking to replace Musk were seen as a “warning shot” by one analyst.
Things, however, are starting to look up for Tesla. The stock is up over 20% in the last five days and 1.7% in early-morning trading Wednesday.
In the wake of that turmoil, Musk pledged to spend “far more” time at Tesla and less time in Washington. He’s been seen more frequently at the company’s headquarters in Austin, Texas, where Tesla now is incorporated. And that shift is important: It means any new pay deal would follow Texas law rather than Delaware’s.
Musk’s 2018 package, once the largest in U.S. corporate history, was rescinded in January by a Delaware judge who criticized the board for acting like “supine servants” to an “overweening master.” The decision is under appeal with Delaware’s Supreme Court.
A fresh package, however, would come at a steep cost. Reissuing the old options would trigger a more than $50 billion accounting charge and a 57% tax hit for Musk, the Financial Times said.