Tesla drops Musk’s ‘interim’ $29B award after Delaware court reinstates bigger pay package

Tesla has withdrawn an “interim” pay package worth $29 billion that it gave its CEO Elon Musk last year, after the Delaware Supreme Court recently reinstated his largest compensation award of $56 billion from 2018.

The company had offered Musk an interim package in August 2025 to avoid the possibility that the Delaware Supreme Court would have dismissed his request. Tesla explained to investors that the interim package would be closed if Musk were to succeed. “[T]here there will be no ‘double dip’,” the company wrote last year.

Indeed, Tesla confirmed in its quarterly filing with the Securities and Exchange Commission on Thursday morning that it passed the interim award on April 21. Tesla said the board voted without Musk or his brother (and co-director) Kimbal Musk.

“These actions are consistent with the principle of ‘no double water’, which prevents Mr. Musk from getting wind when he could use the 2018 CEO Performance Award,” Tesla wrote in the filing.

Tesla gave Musk a package of 56 billion dollars in 2018, and was challenged in court by a shareholder who accused the CEO of actually negotiating with him in the design, and not properly informing the shareholders about this. That case took years to go through the Delaware Court of Chancery before a judge finally ruled in 2024 that the plaintiff was right, and threw out the pay package.

Tesla ran a public affairs campaign while appealing the judge’s decision to the state supreme court. That included a “re-vote” in the package to clearly prove that shareholders were not defrauded. Musk, meanwhile, has threatened to leave Tesla entirely to develop artificial intelligence elsewhere. This prompted Tesla’s board to issue a $29 billion hedge award, and also work on a larger incentive compensation package of up to $1 trillion.

The revocation of this interim award has no effect on Musk’s $1 trillion pocket. To reach that full amount, Musk must lead Tesla through a number of operational steps (such as bringing 20 million cars and a million robots, and putting a million robotaxis on the road), and increase its valuation to $ 8 trillion within 10 years.

Interestingly, Tesla explained in its quarterly filing that it is starting to make its own estimates about what key milestones Musk might not accomplish. The company did not specify what it thought Musk would achieve, but it wrote that it “has a stock-based compensation expense of $9.97 billion for a significant performance milestone expected to be achieved at the time of the award.”

The company went on to say it had unrecognized stock-based compensation expense of between $105.82 billion and $120.37 billion for “performance milestones that were considered unlikely,” although it did not specify which milestones it meant.

While Musk has 10 years to accomplish all of the goals tied to the trillion-dollar package, many of these milestones are reduced versions of promises he’s made in the past. However, it seems that Tesla itself is not sure that it will be able to release at least a few.

Tesla also explained in the filing that its board of directors has decided to place certain restrictions on how and when Musk can sell shares from the now-recovered 2018 package “to minimize any negative impact of the sale of significant shares on the Company.”

Those limits appear to track some of the generalities placed on the $1 trillion pay package. They say Musk must remain CEO or chief product officer at the company until at least 2028 for the shares to be granted, and require him to hold the shares for five years.