Quick Hit:

Tesla's board of directors is reportedly exploring a new pay arrangement for CEO Elon Musk, following a Delaware court decision that struck down his massive 2018 compensation plan. A special committee has been formed to evaluate options, including a new stock-based incentive deal. The move comes as Tesla pivots from electric vehicles toward artificial intelligence and robotics, with Musk’s continued leadership central to its evolving strategy.

Key Details:

• A two-person committee has been formed to explore new compensation options for Elon Musk, according to the Financial Times.

• The review follows a court decision last year that voided Musk’s prior $50 billion pay package due to what was deemed a flawed approval process.

• Any new deal is expected to be tied to Tesla meeting financial, operational, and share price milestones.

Diving Deeper:

Tesla’s board appears to be preparing a strategic response to a Delaware court’s controversial move to void CEO Elon Musk’s historic 2018 pay package—an award that was once hailed by corporate media as performance-driven but ultimately deemed legally flawed in its execution. According to a Financial Times report, board Chair Robyn Denholm and independent director Kathleen Wilson-Thompson are leading a newly-formed committee tasked with crafting a potential new compensation structure for Musk.

The prior $50 billion award, heavily based on aggressive performance benchmarks, was invalidated after a judge ruled that Tesla’s board lacked the independence necessary to fairly negotiate the deal. Musk, who still owns approximately 13% of the company, is appealing the ruling, arguing that the court overstepped and misunderstood key aspects of corporate governance and board authority.

Despite speculation—amplified by a Wall Street Journal report earlier this month—that Tesla's board might be searching for a new CEO, Denholm has denied any such effort is underway. This push to review Musk’s compensation appears to signal the board’s commitment to retaining him amid one of the most transformative periods in Tesla’s history. Rather than focusing solely on affordable EVs—a pillar of Musk’s earlier promises—the company is now prioritizing robotaxis and humanoid robotics, making Tesla as much a tech firm as an automaker.

Tesla had already disclosed in April that it would delay its annual proxy filing and shareholder meeting, hinting at sensitive deliberations underway. The Financial Times now clarifies that this delay was, in part, due to unresolved matters surrounding Musk’s pay. The special committee’s ultimate recommendation could reestablish a long-term incentive structure that rewards innovation and growth while addressing shareholder concerns raised by the earlier court ruling.

In the absence of a finalized package or timeline, the board’s maneuvering sends a clear message: Elon Musk remains central to Tesla’s future, and the company is prepared to fight legal and corporate battles to keep him in command. With Tesla repositioning itself around artificial intelligence and automation, the outcome of this compensation review could shape the direction of the company—and the tech industry—for years to come.