The quantity of wealth amassed for Tesla’s board of directors over the previous two decades has few parallels in corporate America, even by Silicon Valley standards. An independent compensation investigation finds that Tesla directors have jointly earned more than $3 billion through stock awards whose value rose considerably as the company’s share price surged. What distinguishes Tesla different is not only that its board profited from a soaring stock market, but that the initial structure and scale of its director compensation played an extremely substantial role in generating these unprecedented payouts.
At the heart of the matter is how Tesla compensated its directors during the years when the firm was evolving from a niche electric vehicle maker into one of the most valuable automakers in the world. According to statistics studied by compensation and governance specialist Equilar, Tesla’s board awards were significantly bigger than those paid to directors at other major U.S. technology businesses, including the so-called Magnificent Seven whose stocks have defined the long-running bull market. While others also rewarded directors with equity, Tesla’s grants distinguished out in both scale and style.
Several specific figures indicate precisely how large these benefits got over time. Kimbal Musk, who joined the board in 2004 and is the brother of CEO Elon Musk, has earned close to $1 billion based on the appreciated value of stock options he has held or sold. Ira Ehrenpreis, a director since 2007, has accumulated around $869 million. Board chair Robyn Denholm, who arrived in 2014, has realized roughly $650 million. These numbers represent the long-term rise in Tesla’s share price rather than regular fresh grants, demonstrating how early compensation decisions can resonate for decades.
Notably, Tesla’s board have not issued themselves new stock grants since 2020. In 2021, the board agreed to halt director remuneration altogether as part of a settlement ending a shareholder litigation that challenged the level of board pay as excessive. That hold remains in effect, although even when averaged across the period from 2018 to 2024, which includes four years of zero pay, Tesla’s director compensation still substantially surpasses that of peers. During those seven years, the typical Tesla director made about two and a half times as much as the next highest-paid director at Meta, which is in the same category.
The disparity gets considerably stark when focusing on the period right before the suspension. Between 2018 and 2020, the typical Tesla director received roughly $12 million in combined cash and stock remuneration. That amount was about eight times more than what Alphabet’s directors made over the same time, even though Alphabet is one of the most valuable and powerful firms in the world. When Tesla’s share price later surged, the value of those prior rewards quadrupled, locking in gains that dwarf average boardroom earnings.
To be fair, Tesla is not alone in seeing directors benefit from a significant surge in company shares. All members of the Magnificent Seven enjoyed strong appreciation that boosted the value of equity-based remuneration. The difference, as noted by the Equilar analysis, is that Tesla’s directors started with considerably greater incentives, amplifying the eventual consequence. In fact, Tesla’s board wealth was influenced less by continuing pay decisions and more by the extremely rich baseline set years earlier.
Tesla has pushed back against the allegation that its board remuneration was excessive. In a statement, a company spokesperson said its directors’ compensation “is not excessive but directly tied to stock performance and shareholder value creation.” The spokesperson also stressed the level of commitment needed of board members, stating that directors attended 58 full-board or committee meetings in 2024 alone. According to the firm, this degree of interaction is significantly beyond industry averages and reflects the complexity and velocity of Tesla’s operations.
Still, corporate governance analysts point to another distinguishing characteristic of Tesla’s approach: the substantial use of stock options rather than outright share awards to pay directors. This strategy is relatively rare among large U.S. corporations and has garnered criticism for the way it sets incentives. Stock options provide directors the ability to buy shares at a defined price after a particular period. If the stock price goes below that threshold, the option can simply be left unused. If the price rises, the director can buy at a bargain and sell immediately for a profit.
Governance experts contend that this structure gives upside without corresponding adverse risk. When directors are paid in shares instead of options, they directly feel the impact of a dropping stock price, aligning their financial outcomes more closely with those of regular shareholders. By contrast, options can encourage risk-taking because the holder does not lose money if the stock underperforms. According to the National Association of Corporate Directors, only around 5% of the largest 200 businesses in the S&P 500 by revenue compensate directors with stock options, emphasizing how rare Tesla’s approach has been.
Equilar’s findings demonstrate that Tesla directors have previously exercised tens or possibly hundreds of millions of dollars’ worth of options, while still holding equally huge sums that could be converted into shares in the future. Critics are wondering if the right balance was struck between reward and accountability. For supporters, it demonstrates confidence in the company’s long-term trajectory and the board’s willingness to connect its fortunes to Tesla’s market performance.
You should also think about the bigger picture. Tesla has long positioned itself as an unconventional corporation prepared to question standards, whether in manufacturing, sales models, or executive salaries. Its board pay practices fit that trend. At first, when Tesla’s future was very uncertain, giving directors a lot of options may have been a means to get them to join and stay with the company, even though they would be taking on a lot of reputational and financial risk. In hindsight, when Tesla became one of the world’s most valuable firms, the same actions appear astonishingly beneficial.
Public perception, however, fluctuates with circumstances. What originally seemed like a creative way to construct incentives can later seem too much, especially when shareholders wonder if the board’s supervision has been strict and independent enough. The decision to halt director pay after the shareholder action implies that even Tesla realized the need to recalibrate.
