Tesla Explores New Pay Options for Musk Amid Legal Battle Over 2018 Package

American electric vehicle (EV) giant Tesla has appointed Robyn Denholm and Kathleen Wilson-Thompson to a special committee tasked with deciding CEO Elon Musk’s future compensation. Both are independent directors of Tesla, and the committee’s formation was first announced during the company’s earnings release in April.

According to a new report by the Financial Times, the committee will also explore alternative compensation methods for Musk in the event Tesla fails to reinstate his 2018 pay deal, which is currently under appeal at the Delaware Supreme Court. A reply brief from the plaintiff in the case is due on May 16.

The report notes that following the announcement of the committee’s creation, several major investors engaged with Tesla’s board to express their views on Musk’s pay and continued leadership.

The committee’s discussions are still in early stages, and it remains uncertain whether a new pay package will be finalised. Any future stock options for Musk would be contingent on Tesla meeting specific financial, operational, and share price targets.

Tesla also mentioned in a recent filing that its annual shareholder meeting might be delayed, allowing the committee more time to craft a new compensation proposal to present to investors. The company typically holds its annual meeting in May or June.

Musk’s last pay package, approved in 2018, included 304 million stock options—worth $56 billion at the time of a 2024 court ruling, and currently valued at around $98 billion. He became eligible to exercise these options in 2023 after meeting ambitious performance goals. However, on June 4, 2018, a Tesla shareholder filed a lawsuit in the Delaware Court of Chancery against Musk and Tesla’s board.

On January 30, 2024, Judge Kathaleen McCormick struck down the 2018 compensation deal, calling it excessive and criticising Tesla’s board for being overly deferential to Musk. Although the package was reinstated by shareholders during Tesla’s 2024 Annual Meeting, the court refused to revisit its decision on December 2, 2024.

Tesla has since appealed to the Delaware Supreme Court. The company and its board submitted their response briefs on March 11, 2025.

"If the appeal to the Delaware Supreme Court were unsuccessful, it could result in a material adverse impact on our business and reported earnings due to the uncertainty and potentially significant costs associated with replacing or revising Musk’s compensation package,” Tesla said in an SEC filing last month.

If Musk succeeds in reinstating the $98 billion package, his ownership stake in Tesla could rise from just under 13% to more than 20%, according to the Financial Times.

Musk, currently the world’s richest person, has previously threatened to leave Tesla unless he gains greater control over the company.

Wilson-Thompson, the former head of HR at Walgreens Boots Alliance, was also the sole member of a prior special committee that reviewed Musk’s 2018 pay package.