TLDR:
- Tesla board formed special committee to explore new pay package for Elon Musk
- Tesla stock jumped 4% recently, up 25% in past five trading sessions
- Musk’s previous $56 billion compensation package remains in Delaware court appeal
- Cathie Wood predicts Tesla stock could reach $2,600 by 2030, primarily from FSD and robotaxi business
- Musk plans to spend more time at Tesla following disappointing Q1 earnings
Tesla stock has been on a hot streak lately, climbing 4% on Wednesday to close at $347.68. This recent surge adds to an impressive 25% gain over the past five trading sessions. The catalyst? Reports that Tesla’s board is once again exploring compensation options for CEO Elon Musk.
According to the Financial Times, Tesla’s board has formed a special committee to explore a new pay package for Musk. The committee consists of board chair Robyn Denholm and board member Kathleen Wilson-Thompson.
They’re looking at stock options and other potential ways to compensate Musk. This comes as his previous 2018 pay package remains tied up in a Delaware Supreme Court appeal.
The committee is also considering “alternative ways” to pay Musk for past work should Tesla fail to reinstate the previous package through the appeal process.
The Legal Battle Continues
The fight over Musk’s compensation has become legendary in Delaware corporate law circles. Tesla was incorporated in Delaware before moving its headquarters to Austin, Texas, in 2024.
Early last year, a Delaware court struck down Musk’s package. The judge ruled that Tesla’s board didn’t act “in the best interests” of shareholders and showed “barely any evidence of negotiations at all.”
The all-stock pay package was worth around $56 billion at the time. It faced strong criticism from major shareholders who questioned its fairness.
In June, Tesla shareholders voted to reapprove Musk’s record-breaking pay deal. This seemed to remove a big concern hanging over the company.
But in December, the Delaware judge rejected the attempt to reinstate Musk’s compensation. The matter is now being appealed to the Delaware Supreme Court.
Musk’s Growing Demands
Musk has complained about not being paid over the past few years. He’s threatened the board and shareholders that he wouldn’t be “comfortable” leading Tesla without at least 20% ownership of the company.
This implied threat suggested he might take initiatives like AI development to his other companies, such as X.com and xAI, rather than keeping them at Tesla.
After a disappointing Q1 earnings report, Musk publicly stated he would spend more time at Tesla. This announcement seemed aimed at reassuring investors about his commitment to the company that made him the world’s richest person.
But Tesla faces other challenges. Musk’s bets on autonomous driving and robots like Optimus are far from paying off. The company’s aging product lineup and lack of cheaper EVs have hurt demand.
The board has faced its own controversies. Denholm recently denied a Wall Street Journal report claiming the board was looking to replace Musk.
Denholm herself has been questioned by investors. She’s sold $538 million in Tesla stock since joining the board in 2014, raising concerns about her compensation and corporate governance practices.
The board also settled a lawsuit brought by shareholders. They were forced to pay back millions in compensation as part of the settlement.
Despite these challenges, some analysts remain extremely bullish on Tesla’s future. Cathie Wood of Ark Invest has predicted Tesla’s stock could reach $2,600 by 2030.
Wood believes most of Tesla’s future value will come from its full self-driving (FSD) technology and robotaxi business. She estimates these could account for 90% of the stock’s value by 2030.
According to Wood, Tesla’s robotaxi business will likely use a software-as-a-service model. This could generate at least 80% margins for Tesla, far higher than the 15% to 20% margins from electric vehicles today.
Tesla has a major robotaxi launch planned for June that has caught investors’ attention. On the company’s previous earnings call, Musk said he wants FSD ready for widespread use by year-end.
Wood is also optimistic about Tesla’s human-like Optimus robots. Musk has said production on these robots could begin later this year.
He believes Tesla can “scale Optimus up faster than any product in history.” His goal is to reach millions of units per year as soon as possible, with a target of 1 million units by 2029 or 2030.
The special committee’s work on Musk’s compensation comes at a critical time for Tesla. Investors will be watching closely to see what package emerges and whether it can satisfy both Musk and shareholders.
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