Elon Musk: Tesla offers stock option package worth $29 billion

Tesla has approved an additional stock option package for CEO Elon Musk worth $29 billion, according to company filings. The deal grants Musk the right to purchase 96 million Tesla shares at $23.34 per share – the exercise price set in his 2018 compensation plan – as long as he remains at the helm. At Tesla’s current stock price of $302, the package represents a massive potential gain.

Musk’s pay has been contested in court for years. In 2018, he was awarded the right to buy over 300 million shares at $23.34 each if Tesla met ambitious performance targets – a milestone he achieved, securing nearly $50 billion in stock. However, in 2024, a Delaware court voided the award following a shareholder lawsuit, ruling that Musk had undue influence over Tesla’s board during negotiations and that key details were withheld from investors.

Tesla’s largest shareholder (13 percent) has appealed the decision, arguing legal errors in the ruling. Meanwhile, Tesla’s board formed a special committee to reassess Musk’s compensation, stating: »We are confident this award will incentivize Elon to remain at Tesla.« If the original 2018 package is reinstated on appeal, the new grant will be canceled.

In a surprising twist, Tesla investors reapproved the 2018 package at the June 2024 annual meeting – this time fully aware of Musk’s potential influence. The Delaware judge, however, reaffirmed its invalidity.

Protesting the ruling, Musk relocated Tesla’s incorporation from Delaware to Texas and raised the bar for future shareholder lawsuits. Yet the ongoing appeal remains under Delaware jurisdiction, where Tesla must defend the contested package.

MK