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As you may have heard, back in January a judge in Delaware tossed out Elon Musk’s pay package which, at the time, was valued at $55 billion. This deal was agreed to in 2018 and it was not a deal in which he was paid cash for work done. Instead it was an incentive deal which would reward him with a percentage of the company’s stock based on meeting certain metrics. Under Musk, Tesla met all of those milestones.
The plan called for Musk to reap billions if Tesla, which is based in Austin, Texas, hit certain market capitalization and operational milestones. For each incidence of simultaneously meeting a market cap milestone and an operational milestone, Musk, who owned about 22% of Tesla when the plan was approved, would get stock equal to 1% of outstanding shares at the time of the grant. His interest in the company would grow to about 28% if the company’s market capitalization grew by $600 billion.
Each milestone included growing Tesla’s market capitalization by $50 billion and meeting aggressive revenue and pretax profit growth targets. Musk stood to receive the full benefit of the pay plan, $55.8 billion, only by leading Tesla to a market capitalization of $650 billion and unprecedented revenues and earnings within a decade.
Tesla has achieved all twelve market capitalization milestones and eleven operational milestones, providing Musk nearly $28 billion in stock option gains, according to a January post-trial brief filed by the plaintiff’s attorneys.
Despite meeting all of these goals, a small time stockholder filed a lawsuit arguing that the pay package should be voided.
