Tesla is currently fighting a two-front war over how to compensate its CEO, Elon Musk. Even as it proposes a new, trillion-dollar incentive plan for the future, the company is still in court appealing a ruling that blocked a $55.8 billion pay deal from the past.
The company’s latest filing references this ongoing legal battle. An appeal is due to be heard next month regarding the 2018 pay package, which was voided by a Delaware court last year. The judge in that case ruled that the process for approving the deal was “deeply flawed.”
This context is crucial for understanding the new proposal. The board is not just looking forward; it is also trying to create a plan that is immune to the legal arguments that defeated its predecessor. The new plan’s exponentially higher targets and inclusion of product milestones are designed to build a more defensible case for pay-for-performance.
This dual approach—appealing the old deal while proposing a new, even larger one—shows Tesla’s unwavering determination to reward Musk on a grand scale. It signals that the company believes its growth is so intrinsically linked to Musk’s leadership that it is willing to engage in protracted legal fights and shareholder debates to ensure he is incentivized accordingly.
