{"id":59181,"date":"2025-08-05T03:12:10","date_gmt":"2025-08-05T03:12:10","guid":{"rendered":"https:\/\/www.newsbeep.com\/us\/59181\/"},"modified":"2025-08-05T03:12:10","modified_gmt":"2025-08-05T03:12:10","slug":"elon-musk-retains-title-as-the-highest-paid-ceo-in-history-with-26-billion-pay-package-and-the-only-thing-he-has-to-do-is-show-up-for-two-years","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/us\/59181\/","title":{"rendered":"Elon Musk retains title as the highest-paid CEO in history with $26 billion pay package\u2014and the only thing he has to do is show up for two years"},"content":{"rendered":"

The Tesla board has reinstated Elon Musk as the highest-paid CEO in history with a staggering new $29 billion<\/a> pay package. His new deal with the $970 billion electric-vehicle maker comes after a Delaware judge twice rescinded<\/a> Musk\u2019s previous moonshot mega-grant. Musk\u2019s pay has been held up in litigation for the past seven years.\u00a0<\/p>\n

\u201cIt is imperative to retain and motivate our extraordinary talent, beginning with Elon,\u201d Tesla board chair Robyn Denholm and fellow director Kathleen Wilson-Thompson wrote in a letter to shareholders<\/a>. \u201cThe war for AI talent is intensifying, with recent months including multibillion-dollar acquisitions of companies and nine-figure cash compensation packages for non-founder, individual AI engineers.\u201d<\/p>\n

Even in that select group, \u201cno one matches\u201d Musk, the board members wrote. Thus, the nearly $30 billion award is essential to keeping Musk focused on Tesla\u2014and getting him to recruit new talent to keep the EV manufacturer competitive in AI, robotics, and robotaxis, according to the board. Unlike Musk\u2019s previous pay plan, which included significant shareholder value hurdles<\/a> he had to overcome, all Musk has to do to collect the new award is remain with Tesla<\/a> as CEO or in a senior executive role for the next two years. He also has to hold the stock until 2030, according to the terms of the award, which will boost his ownership stake from around 13% to 15%.<\/p>\n

Brian Dunn, a 40-year compensation practitioner and director of the Institute for Compensation Studies<\/a> at Cornell University, told Fortune Musk\u2019s new award resembles what some experts have referred to as \u201cfog-the-mirror grants.\u201d<\/p>\n

\u201cIf you\u2019re around and have enough breath left in you to fog the mirror, you get them,\u201d said Dunn. \u201cThese don\u2019t have performance targets.\u201d<\/p>\n

Technically, the award will be made in restricted shares, but Musk has to pay $23.34 per share to own the stock\u2014the same strike price as his 2018 options. With Tesla\u2019s stock trading at more than $300 a share, the arrangement gives Musk about $280 per share of built-in value, which some comp experts have referred to as \u201cdiscounted options.\u201d<\/p>\n

Larry Cunningham, director of the University of Delaware<\/a>\u2019s Weinberg Center for Corporate Governance, said that regardless of how the award could be classified for accounting or tax purposes, there\u2019s a simple and accurate description for it.\u00a0<\/p>\n

\u201cA deep-in-the-money stock option grant, awarded solely for retention,\u201d Cunningham told Fortune in a statement.\u00a0<\/p>\n

Musk\u2019s pay package has a $26 billion floor<\/p>\n

The new package creates what Farient Advisors\u2019 Eric Hoffmann described as a \u201cfloor-and-ceiling\u201d arrangement tied directly to the outcome of the ongoing litigation in Delaware, which Tesla has appealed. If courts again wipe out his original 2018 award of 303 million stock options, Musk gets to keep the new 96 million shares, worth about $29 billion at the current stock price. But if any part of the original grant gets reinstated, the new award will shrink accordingly, said Hoffmann.\u00a0<\/p>\n

\u201cThere\u2019s a clause that says \u2018no double dipping,\u2019\u201d he said. \u201cBut this 96 million share award could be used to make up any of the original grant if he loses in the course of the legal action.\u201d\u00a0<\/p>\n

Hoffmann said the territory the Tesla board is treading is \u201cunprecedented\u201d in executive compensation.\u00a0<\/p>\n

\u201cThere\u2019s no playbook for this,\u201d said Hoffmann, who analyzed the terms of the award. \u201cThey made the first grant, it got overturned by a judge; they made another grant, got it approved by shareholders, and then that got held up.\u201d<\/p>\n

To level set, a shareholder challenge over Musk\u2019s 2018 pay package led to a landmark opinion in which Musk\u2019s pay was rescinded. The Tesla board then sent the pay plan back to shareholders in 2024 for a say-on-pay vote approval, and shareholders voted in favor of giving Musk the comp. Last December, the same judge\u2014Delaware Court Chancellor Kathaleen McCormick\u2014declined to reverse<\/a> her previous decision, which Tesla has since appealed.\u00a0\u00a0<\/p>\n

In its letter to investors, the board wrote there\u2019s no telling when the court will rule again and described this award as a \u201cfirst step, \u2018good faith\u2019 payment to Elon.\u201d<\/p>\n

However, Tesla\u2019s performance in 2025 is a far cry from 2018, when the board first awarded Musk his daring moonshot grant. He followed the award up by multiplying Tesla\u2019s value 12-fold. Its market cap surpassed $1 trillion in October 2021 and again in May 2025. But recently Tesla has struggled. Year to date, its share price is down more than 18%, and Musk has been active politically, supporting President Donald Trump despite the affiliation turning off Tesla\u2019s climate-focused consumer base, particularly in California<\/a>.\u00a0<\/p>\n

And this time, the board has left little to chance. Tesla erected a significant legal barrier in May that makes a challenge to this award a lot more difficult to mete out.\u00a0<\/p>\n

After McCormick\u2019s ruling, Tesla shareholders approved a move<\/a> from being incorporated in Delaware to Texas<\/a>. In May, Texas amended its business code, and Tesla modified its bylaws accordingly a day later. The bylaw amendment<\/a> created a new threshold so any shareholder who wants to challenge Musk\u2019s pay in court has to hold at least 3% of Tesla\u2019s stock. The value is worth more than $3 billion.\u00a0<\/p>\n

\u201cThe central theme here is that Tesla has moved its jurisdiction of incorporation from Delaware to Texas, and as a result the propriety of Tesla\u2019s actions and Musk\u2019s compensation will have to be judged under Texas law, which is more permissive,\u201d wrote Columbia law professor John Coffee<\/a> in a statement to Fortune. \u201cTesla may get sued, but the odds are more in its favor in Texas.\u201d<\/p>\n

Texas followed Tesla\u2019s move by undertaking a campaign to make it a business-first state. At this point, it\u2019s unclear how Texas courts would approach a challenge.<\/p>\n

\u201cIt will be interesting to see whether a Texas court chooses to follow Delaware\u2019s analytical framework\u2014or instead declines to engage in similar judicial scrutiny,\u201d said Cunningham. \u201cThe outcome could influence how other companies weigh the relative merits of Delaware versus Texas as a corporate home.\u201d<\/p>\n

Investors react to Musk\u2019s comp<\/p>\n

Tesla has a veritable army of engaged individual retail investors, and many support Musk and have voted in favor of his comp plan twice now<\/a>, getting it over the line with more than majority support.\u00a0<\/p>\n

However, some pension fund leaders who oversee retiree assets invested in Tesla stock have been less than thrilled about Musk\u2019s new award.<\/p>\n

\u201cA $29 billion compensation package for any CEO, let alone one who has been largely absent from their daily responsibilities as sales and stock value continue to fall short of investor expectations, is obscene,\u201d said New York City Comptroller Brad Lander in a statement.\u00a0<\/p>\n

Lander said Tesla\u2019s board is enriching Musk at investors\u2019 expense, \u201conce again.\u201d<\/p>\n

Illinois State Treasurer Michael Frerichs told Fortune a $29 billion comp package is \u201cegregious on its face.\u201d<\/p>\n

\u201cBut in light of Elon Musk\u2019s inattention to the day-to-day needs of Tesla, and the company\u2019s worse than expected stock value, the package suggests a board out of step with their responsibilities to investors,\u201d Frerichs wrote in a statement. \u201cWith revenues falling short of expectations, the board should be less concerned with paying fealty to a greedy CEO than with long-term planning for the success of the company. Shareholders should demand better corporate governance.\u201d<\/p>\n

SOC Investment Group, which represented a group of investors with nearly 8 million shares invested in Tesla, told Fortune in a statement that today\u2019s announcement included a striking admission from the board.\u00a0\u201cEven an additional $24B in equity might not motivate Elon Musk to stay for two more years, let alone ensure that he devote sufficient time and attention to turn around the currently slumping sales,\u201d SOC wrote.\u00a0<\/p>\n","protected":false},"excerpt":{"rendered":"The Tesla board has reinstated Elon Musk as the highest-paid CEO in history with a staggering new $29…\n","protected":false},"author":2,"featured_media":59182,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[27],"tags":[13652,28,1427,1428,12,11,1019],"class_list":{"0":"post-59181","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-business","8":"tag-billionaires","9":"tag-business","10":"tag-ceo-salaries-and-executive-compensation","11":"tag-compensation","12":"tag-donald-trump","13":"tag-elon-musk","14":"tag-tesla"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts\/59181","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/comments?post=59181"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts\/59181\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/media\/59182"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/media?parent=59181"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/categories?post=59181"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/tags?post=59181"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}