October 16, 2025 • 10 mins
Elon Musk's $56 billion Tesla compensation package is under review by the Delaware Supreme Court after being voided earlier this year. The case questions whether Tesla's board acted independently or simply followed Musk’s lead. This episode breaks down what’s at stake for Musk, Tesla, and future CEO pay structures across corporate America.
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
(00:01):
Hey everybody, welcome back to the Elon Musk Podcast.
This is a show where we discuss the critical crossroads, the
Shape, SpaceX, Tesla X, the Boring Company, and Neurolink.
I'm your host, Will Walden. Hey everybody, before we get
started today, I've got a littlemoney hack for anyone who wants
to start investing their money but doesn't know where to begin.
(00:24):
Super simple. I use it.
It's called Acorns and I've got 3 spots open for listeners of
this show and if you grab one, you'll get $5 in free bonus cash
just for signing up and making an investment.
And your investment will make you some money over time if you
keep with it. And I use Acorns, like I said, I
(00:45):
love it. It's an automated investing app.
I don't have to do anything I just said and forget.
It makes it easy to start growing your money without being
a financial expert. And you can submit little
amounts or big amounts. It's up to you.
Whatever you want to do. You can turn on roundups.
So every time you spend money, Acorn rounds up your spare
(01:08):
chains and it invests it for you.
You can also set up recurring deposits, and it automatically
invests in a smart, diversified portfolio of ETFs.
So your money works for you in the background.
That's right. I have three spots.
Three spots only. You have to claim this and you
must be a new Acorns user. So if you already have an
account, it's not going to work for you.
(01:29):
You have to sign up with a link in the description.
You have to make your first investment within 15 days, and
like I said, it can be a small investment.
It doesn't have to be anything big.
Your account must stay open and in good standing and it could
take up to about 5 days for thatinitial investment to settle.
So be ready for that now. Once that's done, Acorns will
(01:53):
drop your $5 bonus right into your investment account.
And that's money that'll grow over time and you'll officially
be investing in your future. So I only have three spots.
This offer ends very soon, so don't wait.
Tap the link in the show notes and grab your spot now, because
I only have three spots. Elon Musk's $56 billion Tesla
(02:18):
pay package is now in the hands of the Delaware Supreme Court.
Now, should ACEO be able to helpdesign his own compensation plan
while holding near total influence over the board that
approves it? That is the burning question we
have today. Now, this case isn't about how
well Tesla has performed or whether Musk deserved to be
(02:39):
rewarded. The court is weighing something
more fundamental. The Tesla's board act
independently on their own or inshareholders best interests when
it approved largest executive pay package in U.S. history.
Now that plan was set in 2018 and it promised Elon Musk up to
$55.8 billion in stock options if he hit a series of financial
(03:04):
and operational milestones. And he did it.
But earlier this year, Delaware judge voided the entire package,
calling it an unfair process driven by a board that never
truly negotiated with Musk. Tesla's legal team is now
arguing that the earlier ruling misrepresented the board's role
and failed to give proper weightto the fact that shareholders
(03:25):
overwhelmingly approved the package.
He claimed the court ignored thecontext where investors knew
what they were voting for and Musk still had to deliver
extraordinary growth to receive anything.
Musk met those targets, taking Tesla from a $50 billion company
to 1 worth over $750 billion by the time the final, which was
(03:49):
triggered. Now, the problem is that
shareholder approval doesn't always mean a process was fair.
The lower court found that Tesla's board relied on flawed
assumptions and gave misleading disclosures.
Musk helped craft the plan and had deep personal ties with
several of the directors that were part of this, including his
brother Kimball Musk and close allies in the group there.
(04:13):
Now, the court concluded that this dynamic meant there was no
real arm's length negotiation. He was very close.
Everybody was friends, everybodywas buddies, shaking hands, you
know, back room deals, you know,that kind of thing happens.
It's just the way that works in corporate America.
And at the heart of the appeal is whether Delaware courts
(04:35):
should defer to shareholder votes when there's evidence that
the board's process was compromised from the start.
Musk's attorneys argue that the judge applied an overly
aggressive standard by demandingentire fairness, rather than the
more lenient business judgment rule, which gives boards more
leeway when shareholders approvea deal.
Now, the ruling has now forced the Delaware Supreme Court to
(04:56):
consider how much latitude powerful CE OS can have when
structuring their own pay. The stakes go beyond Musk's own
paycheck, though. He wants that money he's going
to use that money for. He's going to change that stock
into money loans, using it for other projects such as SpaceX or
other Tesla projects. And if this ruling stands, it'll
(05:18):
become harder for CE OS with dominant influence over their
boards to argue that shareholdervotes validate their
compensation. The decision should shift how
corporate boards structure executive pay, especially in
founder LED companies where traditional checks and balances
often are not in place. Boards may need to insulate pay
(05:39):
decisions more carefully from CEO influence, or risk having
these decisions reversed in court.
Or just be more sneaky about it.That would make more sense.
Musk has made it clear he won't stay with Tesla long term if he
doesn't maintain control. He's taking his ball and he's
going home. He's going to go play someplace
else. Maybe he's just going to do
SpaceX. I have a feeling he's going to
(06:01):
stay no matter what. He's trying to call a bluff, and
the courts don't care about that.
The courts care about the law. They don't care about who he
works for or what companies he'sfounded.
They just care about the law. He's already threatened to shift
AI projects to other private companies if he can't secure 25%
voting stake in Tesla. That pressure has only increased
(06:24):
as Tesla's future becomes more tied to its AI off its robots
vehicles. And we also have robo taxis,
automatic everything, autonomousdriving systems, Dojo, things
like that. The board now faces the
challenge of balancing shareholder governance with
retaining a founder who seems tobe indispensable.
(06:48):
You know, Elon himself has said this before, that Tesla would be
nothing without him. I think the board agrees with
him that without Tesla and Musk together, Tesla's just another
car company that makes electric cars.
Their stock would tank if Elon Musk decided to leave.
And that's what he's doing. He's threatening the rest of
(07:11):
Tesla to approve this or he's going to leave now.
The judges don't care. Like I said.
Before and during the hearing, Musk's legal team insisted the
lower court misunderstood the motivations behind the 2018
package. They say it wasn't about
guaranteed pay, but a performance based structure that
aligned Musk's incentives with investors.
(07:32):
The court didn't see it that way, though.
In the original ruling, the judge said Tesla's board failed
to properly vet alternatives andthe process lacked independence
from Musk's personal influence. Tesla's board hasn't commented
on whether a revised pay plan isbeing considered.
The Supreme Court upholds the voiding of the current one, but
Musk already appears to be preparing for the scenario.
(07:53):
He pushed through a shareholder vote in June to reincorporate
Tesla in Texas, where courts have no precedent comparable to
Delaware's rigorous scrutiny of boardroom decisions.
That may reduce legal risk goingforward but won't undo what's in
the past and what's already beendecided in Delaware.
And if Musk loses again, the ruling could create new
(08:16):
expectations for how boards defend massive, absolutely
massive executive payouts. Companies may need to show the
compensation decisions are backed by fully independent
committees, clear disclosures, and real negotiations, not just
buddies handshaking and tell them they got each other's back.
That'll be especially relevant in cases where the CEO also
(08:37):
serves as board chair or hold significant voting power.
I want to know what you think about this.
Do you think Elon is in the right here?
Let me know in the comments. If you're on a podcast platform,
of course that has comments, that would be great.
And also, if you're on a podcastplatform where you haven't
subscribed yet, there's about 75ish percent of you that listen
to the show but haven't subscribed yet, but you keep
(09:00):
listening to the show. So my ask of you is one second
of your time, hit the follow or subscribe button on whatever
podcast platform you're on. That's all I ask.
I don't really ask for anything else.
Over 1000 episodes. Been doing this for six years
and I've been doing it almost every day except for when I'm
sick or I've I'm, you know, taking a little break for a day
(09:22):
or so to catch my breath here. So please hit the subscribe
button. I really do appreciate it.
And if you really feel like you absolutely love the show, we
need your help. Five star ratings and you know,
the best ratings you can do the great ratings or whatever
they're whatever podcast platform you're on really does
(09:43):
help the show. And I will continue doing the
show but it helps me do more shows.
Hey everybody, welcome back to the Elon Musk Podcast.
This is a show where we discuss the critical crossroads, the
Shape, SpaceX, Tesla X, the Boring Company, and Neurolink.
I'm your host, Will Walden. Hey everybody, before we get
started today, I've got a littlemoney hack for anyone who wants
to start investing their money but doesn't know where to begin.
(00:24):
Super simple. I use it.
It's called Acorns and I've got 3 spots open for listeners of
this show and if you grab one, you'll get $5 in free bonus cash
just for signing up and making an investment.
And your investment will make you some money over time if you
keep with it. And I use Acorns, like I said, I
(00:45):
love it. It's an automated investing app.
I don't have to do anything I just said and forget.
It makes it easy to start growing your money without being
a financial expert. And you can submit little
amounts or big amounts. It's up to you.
Whatever you want to do. You can turn on roundups.
So every time you spend money, Acorn rounds up your spare
(01:08):
chains and it invests it for you.
You can also set up recurring deposits, and it automatically
invests in a smart, diversified portfolio of ETFs.
So your money works for you in the background.
That's right. I have three spots.
Three spots only. You have to claim this and you
must be a new Acorns user. So if you already have an
account, it's not going to work for you.
(01:29):
You have to sign up with a link in the description.
You have to make your first investment within 15 days, and
like I said, it can be a small investment.
It doesn't have to be anything big.
Your account must stay open and in good standing and it could
take up to about 5 days for thatinitial investment to settle.
So be ready for that now. Once that's done, Acorns will
(01:53):
drop your $5 bonus right into your investment account.
And that's money that'll grow over time and you'll officially
be investing in your future. So I only have three spots.
This offer ends very soon, so don't wait.
Tap the link in the show notes and grab your spot now, because
I only have three spots. Elon Musk's $56 billion Tesla
(02:18):
pay package is now in the hands of the Delaware Supreme Court.
Now, should ACEO be able to helpdesign his own compensation plan
while holding near total influence over the board that
approves it? That is the burning question we
have today. Now, this case isn't about how
well Tesla has performed or whether Musk deserved to be
(02:39):
rewarded. The court is weighing something
more fundamental. The Tesla's board act
independently on their own or inshareholders best interests when
it approved largest executive pay package in U.S. history.
Now that plan was set in 2018 and it promised Elon Musk up to
$55.8 billion in stock options if he hit a series of financial
(03:04):
and operational milestones. And he did it.
But earlier this year, Delaware judge voided the entire package,
calling it an unfair process driven by a board that never
truly negotiated with Musk. Tesla's legal team is now
arguing that the earlier ruling misrepresented the board's role
and failed to give proper weightto the fact that shareholders
(03:25):
overwhelmingly approved the package.
He claimed the court ignored thecontext where investors knew
what they were voting for and Musk still had to deliver
extraordinary growth to receive anything.
Musk met those targets, taking Tesla from a $50 billion company
to 1 worth over $750 billion by the time the final, which was
(03:49):
triggered. Now, the problem is that
shareholder approval doesn't always mean a process was fair.
The lower court found that Tesla's board relied on flawed
assumptions and gave misleading disclosures.
Musk helped craft the plan and had deep personal ties with
several of the directors that were part of this, including his
brother Kimball Musk and close allies in the group there.
(04:13):
Now, the court concluded that this dynamic meant there was no
real arm's length negotiation. He was very close.
Everybody was friends, everybodywas buddies, shaking hands, you
know, back room deals, you know,that kind of thing happens.
It's just the way that works in corporate America.
And at the heart of the appeal is whether Delaware courts
(04:35):
should defer to shareholder votes when there's evidence that
the board's process was compromised from the start.
Musk's attorneys argue that the judge applied an overly
aggressive standard by demandingentire fairness, rather than the
more lenient business judgment rule, which gives boards more
leeway when shareholders approvea deal.
Now, the ruling has now forced the Delaware Supreme Court to
(04:56):
consider how much latitude powerful CE OS can have when
structuring their own pay. The stakes go beyond Musk's own
paycheck, though. He wants that money he's going
to use that money for. He's going to change that stock
into money loans, using it for other projects such as SpaceX or
other Tesla projects. And if this ruling stands, it'll
(05:18):
become harder for CE OS with dominant influence over their
boards to argue that shareholdervotes validate their
compensation. The decision should shift how
corporate boards structure executive pay, especially in
founder LED companies where traditional checks and balances
often are not in place. Boards may need to insulate pay
(05:39):
decisions more carefully from CEO influence, or risk having
these decisions reversed in court.
Or just be more sneaky about it.That would make more sense.
Musk has made it clear he won't stay with Tesla long term if he
doesn't maintain control. He's taking his ball and he's
going home. He's going to go play someplace
else. Maybe he's just going to do
SpaceX. I have a feeling he's going to
(06:01):
stay no matter what. He's trying to call a bluff, and
the courts don't care about that.
The courts care about the law. They don't care about who he
works for or what companies he'sfounded.
They just care about the law. He's already threatened to shift
AI projects to other private companies if he can't secure 25%
voting stake in Tesla. That pressure has only increased
(06:24):
as Tesla's future becomes more tied to its AI off its robots
vehicles. And we also have robo taxis,
automatic everything, autonomousdriving systems, Dojo, things
like that. The board now faces the
challenge of balancing shareholder governance with
retaining a founder who seems tobe indispensable.
(06:48):
You know, Elon himself has said this before, that Tesla would be
nothing without him. I think the board agrees with
him that without Tesla and Musk together, Tesla's just another
car company that makes electric cars.
Their stock would tank if Elon Musk decided to leave.
And that's what he's doing. He's threatening the rest of
(07:11):
Tesla to approve this or he's going to leave now.
The judges don't care. Like I said.
Before and during the hearing, Musk's legal team insisted the
lower court misunderstood the motivations behind the 2018
package. They say it wasn't about
guaranteed pay, but a performance based structure that
aligned Musk's incentives with investors.
(07:32):
The court didn't see it that way, though.
In the original ruling, the judge said Tesla's board failed
to properly vet alternatives andthe process lacked independence
from Musk's personal influence. Tesla's board hasn't commented
on whether a revised pay plan isbeing considered.
The Supreme Court upholds the voiding of the current one, but
Musk already appears to be preparing for the scenario.
(07:53):
He pushed through a shareholder vote in June to reincorporate
Tesla in Texas, where courts have no precedent comparable to
Delaware's rigorous scrutiny of boardroom decisions.
That may reduce legal risk goingforward but won't undo what's in
the past and what's already beendecided in Delaware.
And if Musk loses again, the ruling could create new
(08:16):
expectations for how boards defend massive, absolutely
massive executive payouts. Companies may need to show the
compensation decisions are backed by fully independent
committees, clear disclosures, and real negotiations, not just
buddies handshaking and tell them they got each other's back.
That'll be especially relevant in cases where the CEO also
(08:37):
serves as board chair or hold significant voting power.
I want to know what you think about this.
Do you think Elon is in the right here?
Let me know in the comments. If you're on a podcast platform,
of course that has comments, that would be great.
And also, if you're on a podcastplatform where you haven't
subscribed yet, there's about 75ish percent of you that listen
to the show but haven't subscribed yet, but you keep
(09:00):
listening to the show. So my ask of you is one second
of your time, hit the follow or subscribe button on whatever
podcast platform you're on. That's all I ask.
I don't really ask for anything else.
Over 1000 episodes. Been doing this for six years
and I've been doing it almost every day except for when I'm
sick or I've I'm, you know, taking a little break for a day
(09:22):
or so to catch my breath here. So please hit the subscribe
button. I really do appreciate it.
And if you really feel like you absolutely love the show, we
need your help. Five star ratings and you know,
the best ratings you can do the great ratings or whatever
they're whatever podcast platform you're on really does
(09:43):
help the show. And I will continue doing the
show but it helps me do more shows.
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