Tesla stock adds to recent gains on report new Musk pay deal in the works

Updated Wed, May 14, 2025, 5:56 AM 3 min read

Tesla (TSLA) stock is chugging higher on Tuesday as on reports the company’s board is once again exploring how to compensate CEO Elon Musk.

Per the Financial Times (FT), Tesla’s board has formed a special committee to explore a new pay package for Musk, with stock options potentially on the table. The FT says the special committee is made up of chair Robyn Denholm and board member Kathleen Wilson-Thompson. The committee will also explore “alternative ways” to compensate Musk for past work should Tesla fail to reinstate Musk’s prior 2018 pay package that’s on appeal with the Delaware Supreme Court.

Tesla shares have been on a tear recently, up nearly 3% today in pre-market trading and jumping over 20% in the past 5 trading sessions.

The battle over Musk’s pay package will go down in the lore of Delaware corporate law battles. Tesla was incorporated in the state before moving its headquarters to Austin, Texas, in 2024.

Early last year Musk’s package was struck down by a Delaware court, with the judge finding that Tesla’s board didn’t act “in the best interests” of Tesla shareholders and showed “barely any evidence of negotiations at all.” The all-stock pay package, worth around $56 billion at the time of exercise, had been embroiled in controversy as major shareholders argued over its fairness.

Then in June Tesla shareholders reapproved Elon Musk’s record-breaking pay pact, removing a big overhang with investors seemingly blessing the controversial compensation plan, in addition to approving the move of Tesla’s corporate domain to Texas from Connecticut.

But that didn’t seem to matter, as the Delaware judge rejected the attempt to reinstate Musk’s pay in December, with the matter now on appeal.

If the appeal fails, a new package for Musk would be needed as the CEO has complained about not being paid over the past few years, and has threatened the board and shareholders in the past that he wouldn’t be “comfortable” leading Tesla without at least 20% ownership of the company. The threat implied he would be taking initiatives like AI development to his other companies like X.com and xAI.

Musk’s recent behavior may also be a problem from a perception point of view. His embrace of President Trump and far-right positions has led to blowback, with Tesla sales falling in major territories, with the Tesla brand seen as deeply damaged.

Following a dismal Q1 earnings report, Musk publicly stated that he would be spending more of his time at Tesla, meaning he would be back at the helm of the company that made him the world’s richest person and Tesla one of the very few companies with a trillion dollar market cap.