Description

If you thought $56 billion was a big payday for Elon Musk, you won’t believe the new proposal: $1 trillion. What does that type of incentive package even look like and how will shareholders and the public react to the largest CEO payday in history? Ann Lipton, Laurence W. DeMuth Chair of Business Law at the University of Colorado Law School, breaks down Tesla’s unprecedented $1 trillion pay package, starting with the backstory of Musk’s 2018 $56 billion compensation plan, the Delaware litigation that rescinded it, and the board’s recent move to grant him 96 million shares as a hedge against losing on appeal. We then turn to the new $1 trillion incentive plan, which ties Musk’s payout to ambitious milestones, from doubling Tesla’s market cap to delivering 20 million vehicles, selling millions of robotaxis, and expanding full self-driving subscriptions. We explore shareholder approval dynamics, board independence questions, and why the plan is designed to guarantee Musk 25% voting power. Learn how this landmark deal could transform Tesla and set new precedents for executive pay across all American corporations.

Key Points From This Episode:

• Musk’s 2018 $56B compensation plan, why it was struck down in Delaware, and where it currently stands.
• The board’s decision to grant Musk 96 million shares in case he loses the Delaware Supreme Court appeal.
• How Texas law makes shareholder lawsuits against Tesla nearly impossible.
• Tesla’s new $1 trillion, 10-year incentive plan and the milestones tied to Musk’s payout.
• Why reaching milestones early matters for Musk, as early wins allow shares to vest sooner.
• The plan’s lack of requirements for Musk’s time commitment, despite his other ventures.
• How the board is using financial incentives to keep Musk focused on Tesla.
• Why shareholder approval is expected to pass and how it could give Musk 25% voting power.
• Questions raised about board independence and the special committee’s role.
• The consequences of Tesla’s reliance on Musk’s vision to sustain its market value.
• Key financial and tax advantages for Tesla if they win in Delaware.
• Details of the Delaware Supreme Court oral arguments scheduled for October via livestream.

Links Mentioned in Today’s Episode:

Ann Lipton
Ann Lipton on LinkedIn
Ann Lipton on Bluesky
Ann Lipton Blog
Shareholder Primacy Podcast
Delaware Judicial Courts | Live Stream
Fordham University School of Law Corporate Law Center