Elon Musk's Big Win: Tesla's $139 Billion Pay Package Back in Play

The Delaware Supreme Court has overturned a lower court's decision, reinstating Elon Musk's $139 billion pay package with Tesla. The initial deal, struck in 2018, was valued at approximately $56 billion but has since appreciated due to Tesla's stock performance.

Key Points

• Court's Decision: The higher court ruled that Musk should not be left without compensation for his work over the past six years.
• Musk's Reaction: Musk expressed his relief and satisfaction on his social media platform, X, stating he felt "vindicated."
• Stock Ownership: If Musk exercises all the stock options from the 2018 plan, his ownership in Tesla will increase from the current 12.4% to approximately 18.1%.
• Future Plans: Musk has indicated his intention to retain control of Tesla, where he also serves as the CEO. He is also the CEO of SpaceX and xAI.
• Board's Stance: Tesla's board has suggested that Musk might consider leaving if he does not receive additional voting power and performance-based compensation.

Controversy and Concerns

• Lower Court's Ruling: Earlier this year, a lower court had invalidated the pay plan, citing insufficient disclosure to shareholders.
• Musk's Criticism: Musk had criticized the Delaware court system, alleging bias against tech founders.
• New Pay Plan: The higher court noted that Tesla shareholders approved a new pay plan for Musk in November, which could be worth up to $1 trillion if certain performance targets are met.
• Criticism of New Plan: Some critics argue that the new plan might not incentivize Musk to perform at his best, as he could meet minimum goals and still receive substantial compensation.
• Market Reaction: Tesla's stock price closed at $481.20 on Friday but saw a slight uptick in after-hours trading.

Conclusion

The Delaware Supreme Court's decision has significant implications for Musk's future with Tesla and his financial stake in the company. While the ruling has been met with mixed reactions, it underscores the importance of performance-based compensation in the tech industry.