Tesla drops Musk’s $29 billion ‘interim’ bonus after Delaware court reinstates larger pay package

Tesla has canceled the $29 billion “temporary” pay package it offered its CEO Elon Musk last year, after the Delaware Supreme Court recently reinstated his larger $56 billion compensation from 2018.

The company had given Musk the temporary package in August 2025 to hedge against the possibility that the Delaware Supreme Court would reject his appeal. Tesla explained to investors that the temporary package will be canceled if Musk wins. “[T]“There can be no ‘double dip,’” the company wrote last year.

To be sure, Tesla confirmed in its quarterly filing with the Securities and Exchange Commission on Thursday morning that it had filed the interim award on April 21. Tesla said the board voted without Musk or his brother (and fellow director) Kimbal Musk.

“These actions are consistent with the ‘no double dip’ principle, which prevents Mr. Musk from receiving a windfall in the event he receives the 2018 CEO Performance Award,” Tesla wrote in its filing.

Tesla awarded the $56 billion package to Musk in 2018, and it was challenged in court by a shareholder who accused the CEO of essentially negotiating against himself in designing it, and not properly communicating it to shareholders. The case took years to be heard in Delaware Court of Chancery before a judge eventually decided in 2024 that the plaintiff was right, vacating the pay package.

Tesla launched a public affairs campaign while appealing the judge’s decision to the state Supreme Court. This included a “re-vote” on the package to ostensibly prove that shareholders had not been deceived. Meanwhile, Musk has threatened to leave Tesla entirely to develop AI elsewhere. This has prompted Tesla’s board of directors to place a $29 billion award as a hedge, and also work on a much larger and more ambitious compensation package worth up to $1 trillion.

Canceling this temporary award has no impact on Musk’s $1 trillion package. To reach that full amount, Musk would have to lead Tesla through a number of operational milestones (such as delivering 20 million vehicles and 1 million robots, and putting 1 million robotaxis on the road), and increase its valuation to more than $8 trillion over 10 years.

Interestingly, Tesla explained in its quarterly report that it has begun making its own estimates about what milestones Musk may and may not achieve. The company did not specify what it believed Musk would accomplish, but wrote that it had “unrecognized stock-based compensation expense of $9.97 billion for an operational milestone that was deemed likely to be accomplished during the term of the award.”

The company went on to say that it had unrecognized stock-based compensation expense ranging from $105.82 billion to $120.37 billion for “operational milestones that were deemed unlikely to be achieved,” though it did not specify what milestones they meant.

While Musk has 10 years to accomplish all goals associated with the $1 trillion package, many of these operational milestones are watered-down versions of promises he made previously. However, Tesla himself seems unsure that he will be able to implement at least a few of them.

Tesla also explained in the filing that its board decided to put some barriers around how and when Musk could sell shares from the now-recovered 2018 package “to mitigate any negative impact of large stock sales on the company.”

These restrictions appear to follow some of the more general restrictions set out in the $1 trillion wage package. They dictate that Musk must remain CEO or a product development executive at the company until at least 2028 until the shares vest, and they require him to hold the shares for five years.