Tesla has retracted the temporary $29 billion pay package it awarded to CEO Elon Musk last year after the Delaware Supreme Court reinstated a larger $56 billion compensation from 2018. The interim package was initially granted in August 2025 to safeguard against a potential unfavorable ruling that the court might issue regarding Musk’s appeal. At that time, Tesla assured investors that if Musk succeeded in his appeal, the interim pay would be rescinded to prevent what they termed a “double dip.”
The company confirmed the revocation in its recent quarterly filing with the Securities and Exchange Commission, stating that the board made the decision without Musk and his brother, Kimbal Musk, who is also a director. Tesla emphasised in the filing that this action aligns with the principle of avoiding double compensation for Musk, ensuring he does not benefit from both the interim package and the 2018 performance award if he is successful.
The $56 billion compensation package, awarded to Musk in 2018, faced legal challenges from shareholders who claimed Musk had not appropriately communicated its terms and was in effect negotiating against his own interests. After prolonged legal battles, a judge ruled in 2024 that the shareholders were correct, leading to the package being annulled. During this time, Tesla undertook a public relations campaign to reinforce shareholder confidence, even re-voting on the package to quell concerns. Throughout this period, Musk hinted at the possibility of transitioning away from Tesla to focus on artificial intelligence, prompting the board to devise the interim pay package as a precaution, as well as work on an ambitious $1 trillion compensation plan contingent upon achieving several operational milestones.
The withdrawal of the interim award will not affect Musk’s eligibility for the $1 trillion package. To qualify for this substantial remuneration, he must meet specific targets, including delivering 20 million vehicles, producing one million robots, and launching a million robotaxis over the next decade, while also increasing Tesla’s valuation to over $8 trillion.
Moreover, Tesla indicated in the filing that it is beginning to make its own projections regarding which milestones Musk may or may not achieve. While there are unrecognised stock-based compensation expenses estimated between $9.97 billion to $120.37 billion for these milestones, the specific ones remain unspecified. Interestingly, some of these operational goals appear to be more lenient versions of previous commitments made by Musk.
To further secure Tesla’s interests, the board has implemented restrictions regarding how and when Musk can sell shares from the 2018 package to minimise the potential adverse effects of substantial share sales on the company. These limitations align with those anticipated under the $1 trillion agreement, mandating Musk’s continuation as CEO or a product development executive until at least 2028 for the shares to vest, as well as a requirement to hold the shares for a minimum of five years.
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