Kimbal Musk Discusses Elon's Tesla Compensation: 'He Earned It'

Kimbal Musk, brother of billionaire Elon Musk, has spoken out regarding the controversial financial package allocated to Tesla's CEO. He has expressed his belief that Elon is deserving of compensation, as Tesla continues to grapple with legal challenges concerning the CEO's pay.

Appearing on CNBC’s “Squawk Box,” Kimbal Musk declared, “My brother should indeed be remunerated. For the last several years, he hasn't received any direct salary. I find that inequitable. Although the ultimate say lies with Tesla’s shareholders, I am of the opinion that he merits compensation.”

Instead of a regular salary or cash bonuses, Elon Musk's payment at Tesla is structured around 'performance awards.' These consist of stock options that are only granted upon Tesla achieving specific performance goals.

In recent developments, Tesla has offered Elon Musk a provisional remuneration consisting of 96 million shares, potentially valuing at $29 billion. This agreement mandates that the shares are to vest over a couple of years, on the condition that Musk remains in a top executive role.

This recent compensation arrangement was sanctioned by a 'special committee' from Tesla’s board, notably excluding both Elon and Kimbal Musk from the decision-making process, according to board members Robyn Denholm and Kathleen Wilson-Thompson in their communication dated August 4 to the shareholders.

The award follows a court decision from December, instructing Tesla to rescind Elon Musk's massive $56 billion pay plan from 2018, which marked an unprecedented compensation for a public company executive in the U.S.

Elon Musk's Future Plans and Pay Talk

Prior to a judgment by the Delaware court on his 2018 compensation package, Elon Musk, in January 2024, signaled in a social media post on the platform now called X, a desire for more control and benefits within Tesla.

Musk expressed concerns over leading Tesla in advanced technologies like AI and robotics without holding approximately one-quarter voting power. Enough to exert influence, but restrained enough to allow override, he noted honesty in preferring to pursue such innovations independently if the situation doesn't align.

Musk's business ventures extend beyond Tesla, as evidenced by his new project, xAI, which came into existence in Nevada as of March 2023.

The updated compensation plan was set without acquiring shareholder approval and will come into effect only if Musk and Tesla do not succeed in their Delaware appeal.

The SOC Investment Group, which collaborates with pension funds, made a formal appeal to Nasdaq, prompting an investigation into Tesla and criticized the board's decision, arguing that shareholder consent should have been secured in line with Nasdaq's listing regulations.

Denholm and Wilson-Thompson confirmed in the letter that the special committee is devoted to devising a 'long-term CEO compensation plan,' which is expected to be put forth for a shareholder vote at Tesla's forthcoming yearly meeting in November.