Tesla's board of directors has accumulated more than $3 billion in stock awards since 2004, significantly outpacing compensation at other leading U.S. technology companies. Key members like Kimbal Musk and Robyn Denholm have reaped substantial gains from these awards. The structure raises concerns about governance and board independence.
Since 2004, Tesla's board has earned over $3 billion through stock awards, far exceeding payouts at peers in the technology sector. This figure dwarfs compensation at firms like Alphabet, Meta, Apple, Microsoft, Amazon, and Nvidia, collectively known as the Magnificent Seven. Among Tesla's directors, Elon Musk's brother Kimbal has collected nearly $1 billion, Ira Ehrenpreis $869 million, and board chair Robyn Denholm $650 million. These gains primarily stem from stock options that surged in value alongside Tesla's rising share price.
The compensation model, heavily reliant on options rather than shares, allows directors to benefit from stock increases without bearing losses during declines. This differs from restricted stock used elsewhere, which aligns interests more closely with shareholders over the long term. From 2018 to 2024, Tesla directors averaged $1.7 million annually, even after suspending pay for four years—a sum more than double that of Meta's board, the next highest among peers.
Governance issues have intensified scrutiny. In 2021, the board halted new stock grants amid a shareholder lawsuit claiming excessive pay. A Delaware court has also examined Elon Musk's 2018 compensation package, ruling that personal ties and high payouts undermined fair negotiations. In 2024, the board proposed a new package for Musk that could reach $1 trillion in Tesla stock over the next decade.
Experts highlight risks to board objectivity, as directors' wealth ties directly to stock performance rather than cash incentives. Reforms suggested include shifting to restricted stock and enhancing shareholder input on pay plans. Ongoing legal challenges and investor oversight will likely shape future practices at Tesla.
