Board members said $29 billion payment will make Musk stay with Tesla
Tesla has announced it is offering Elon Musk an interim $29 billion "good faith" payment in a bid to retain him amid the ongoing legal dispute over his 2018 compensation package.
Board Members Robyn Denholm and Kathleen Wilson-Thompson told Tesla shareholders in a letter on Monday that the pay package will also incentivise Musk to remain at the company amid his other ventures.
"To be clear, losing Elon would not only mean the loss of his talents but also the loss of a leader who is a magnet for hiring and retaining talent at Tesla," they wrote in the letter.
Under the payment, Musk receives 96 million restricted shares of stock, which would be worth about $29 billion.
It comes after the Delaware court in January upheld its ruling that Musk's 2018 CEO compensation plan worth $56 billion was improperly granted to him, which the chief executive is currently appealing.
The board members said there is "no clear timeline for resolution," as they await a hearing date at the Delaware Supreme Court.
"Despite these legal challenges, we can all agree that Elon has delivered the transformative and unprecedented growth that was required to earn all milestones of the 2018 CEO Performance Award," the board members said.
"Thus, as evidence that Tesla is committed to honouring its promises in the 2018 CEO Performance Award and intends to compensate its CEO for his future services commensurate with his contributions to our company and shareholders, we have recommended this award as a first step, 'good faith' payment to Elon."
The pair stated that if the Delaware courts fully reinstate the 2018 CEO Compensation Award, the interim award will be forfeited or returned, or a portion of the 2018 CEO Performance Award will be forfeited.
"Elon will not be able to keep this new award in addition to the options he will be awarded under the 2018 CEO Performance Award should the courts rule in our favour," they said.
Retaining Elon Musk
The "good faith" payment to Musk requires that he serves continuously in a senior leadership role at Tesla for a two-year vesting term.
It comes after Musk said last year that he already feels "uncomfortable growing Tesla to be a leader in AI & robotics without having ~25% voting control."
"Unless that is the case, I would prefer to build products outside of Tesla," he said in an X post last year.
Denholm and Wilson-Thompson said it is imperative that Tesla retains and motivates its "extraordinary talent, beginning with Elon."
"The war for AI talent is intensifying, with recent months including multi-billion-dollar acquisitions of companies and nine-figure cash compensation packages for non-founder, individual AI engineers," they said.
"Even among this group of highly talented individuals, no one matches Elon's remarkable combination of leadership experience, technical expertise, and, arguably most importantly, decades-long proven track record of building the most revolutionary and profitable businesses across different industries."
Musk also holds leadership roles at xAI, SpaceX, Neuralink, X Corp., and The Boring Company. His involvement in other organisations, as well as politics in the previous year, has prompted some Tesla shareholders to ask him to commit at least 40 hours a week to the automotive firm to address its challenges.
"While we recognise that Elon's business ventures, interests and other potential demands on his time and attention are extensive and wide-ranging… we are confident that this award will incentivise Elon to remain at Tesla and focus his unmatched leadership abilities on further creating shareholder value for Tesla shareholders and attracting and retaining talent at Tesla," the board members said in the letter.
