According to an analysis conducted for Reuters by compensation and corporate governance research firm Equilar,Tesla board members made more than $3 billion in stock awards,It far exceeds the stock awards awarded to its directors by other U.S. technology giants during the same period.
Analysis shows that Kimbal, the younger brother of Tesla CEO Elon Musk, has made nearly $1 billion since 2004, based on the appreciation of stock options that have been realized or held by Tesla directors. Tesla director Ira Ehrenpreis has made $869 million since 2007. Tesla Chairman Robyn Denholm has made $650 million since 2014.
The generous gains come despite the fact that Tesla directors have not granted themselves new stock awards since 2020.Tesla’s board of directors has previously agreed to suspend director compensation starting in 2021 to settle a shareholder lawsuit alleging excessive director compensation.
However,Between 2018 and 2020, the average cash and stock compensation received by Tesla directors was approximately $12 million, which is approximately eight times that of Alphabet, which had the second-highest average director compensation among the "Big Seven" during the same period.
Musk's brother Kimbal
The value of those shares that Tesla directors initially received skyrocketed as Tesla's stock price soared in subsequent years. The same is true for the other six companies in the “Big Seven”: Nvidia, Alphabet, Meta, Apple, Microsoft and Amazon. These seven companies earned this title precisely because their stock prices soared and became important drivers of this long-term bull market.
But Equilar's analysis shows that of the seven companies, only Tesla's directors' initial stock awards played such a disproportionate role in the vast wealth they gained from their part-time work as directors.Even after including the four-year salary moratorium (2021-2024), the average compensation of Tesla directors between 2018 and 2024 is still 2.5 times that of Meta directors, the second highest-paid directors in the same period.
stock options
Moreover, Tesla's board also chose to pay itself in the form of stock options rather than shares, a move that is rare and has been criticized by some corporate governance experts because it magnifies the upside of directors' earnings without downside risk. Equilar found that Tesla directors have exercised options worth tens or even hundreds of millions of dollars to date, and they still hold equally large unexercised stock options.
A stock option is the right to buy a company's stock at a preset price after a specified period of time. Corporate governance experts point out that option holders take no risk because they can choose not to exercise their options if the value of the stock falls below a preset price. And if the stock price rises, they can buy the stock at a discount and sell it immediately for a profit.
A Tesla spokesman said in a statement to Reuters that its director compensation "is not excessive and is directly tied to stock price performance and the creation of value for shareholders."The statement also stated that Tesla board members have provided excellent service to Tesla and invested "substantial time and energy", such as attending 58 full board or committee meetings in 2024. The spokesman said the frequency of meetings was much higher than industry norms.