Tesla’s board has made over 3 billion dollars in stock awards, much higher than other directors at major U.S. technology firms.
The largest benefits went to a few long-standing directors. Elon Musk’s brother Kimbal Musk has earned close to 1 billion dollars since joining the board in 2004. Since 2007, Ira Ehrenpreis has made about $869 million, and board chair Robyn Denholm about $650 million since 2014, based on the value of stock options granted or sold.
After decreasing director stock awards in 2020 and halting board compensation in 2021 to pay a shareholder lawsuit over excessive pay, the value of previous awards rose as Tesla’s share price increased. From 2018 to 2020, the average cash and stock compensation for Tesla directors was about $ 12 million, roughly eight times higher than at Alphabet, the next-best-compensated among the “Magnificent Seven” technology companies.
Equilar found that even after including years of suspended pay, the average compensation of Tesla directors from 2018 to 2024 remained about two-and-a-half times greater than that of Meta directors, the closest peer. Tesla was unique among companies where directors receive disproportionately high original stock grants.
Tesla justified its strategy by saying director compensation is directly tied to stock performance and shareholder value. A company spokesperson said board members spend significant time on oversight, attending 58 full-board or committee meetings in 2024, compared to industry standards.
However, governance experts criticized Tesla’s use of stock options instead of stock shares, saying options amplify positive returns but leave directors without losses if the stock declines. Industry data shows that 5% of the largest U.S. companies grant options to directors. Some analysts said Tesla’s board compensation could jeopardize directors’ autonomy to manage the company and its CEO.
The problem has been subjected to legal investigation. One of the judges in Delaware last year overturned a 2018 compensation package for Musk, finding it excessively high and that he had personal relationships with the directors. Tesla has challenged that decision and proposed a different remuneration package, which might put Musk back at the top of the compensation list.