Elon Musk’s compensation package case will haunt Tesla for years
I believe that Elon Musk’s compensation package will haunt Tesla for years as lawsuits are already piling up.
Everyone is pointing fingers at who they think is responsible for this situation. Here’s my take.
We are less than two weeks away from Tesla’s annual shareholders meeting during which we will know the results of the shareholder vote on Musk’s compensation package and incorporation move to Texas.
Many shareholders falsely believe that the issue will end there.
Shareholders will vote either for or against these two proposals. The truth is that not much will change after June 13th.
If shareholders vote yes again on the package, at best, it will be used as evidence that shareholders still support the deal for the appeal process in the case, which is still months away.
As for the incorporation move to Texas, many shareholders believe that this would allow Tesla to circumvent the judge’s decision in Delaware. However, Tesla and the judge recently had communications over that concern, and Tesla reassured the judge that they will continue to litigate the case in its proper jurisdiction: Delaware.
The next step is a hearing over the compensation that the lawyers for the shareholder who sued Musk and Tesla are asking for, which is a ridiculous $6 billion.
The compensation will likely be greatly reduced by the judge, but they will likely still get a nice payday, and the vultures are already circling to get more.
A new lawsuit was filed last week against Musk and Tesla directors over alleged insider trading by the CEO and breach of fiduciary duty by board members.
Regardless of the results of the votes later this month, Tesla will likely face other lawsuits regarding its corporate governance, which is being increasingly exposed by Tesla and Musk’s reaction to the judge’s decision over his compensation package.
For example, Musk has threatened not to work on AI products at Tesla if he doesn’t get 25% control over the company despite saying that Tesla is worthless without AI.
Electrek’s Take
I think I managed to distill my thoughts on Elon’s compensation package at Tesla into something a little clearer. I have been reporting on this for months, and I’m tired of it, but unfortunately, I think it will be a story for months, if not years, to come
Like many Tesla shareholders, I wasn’t happy about Elon selling shares from his previous CEO compensation package to buy Twitter.
But I understand that it is his right to do so.
He can do what he wants with his money, but he did lose credibility in my eyes because I remember him saying this:
He got a lot of people to believe in Tesla through commitments like this and then he broke it to buy Twitter of all things.
But Fred, that’s old.
OK, he also said this:
And then sold billions of dollars worth of Tesla shares in the following months.
All good. It’s not great for his credibility, but again, his money.
Now, what about this new 2018 compensation plan?
Do I really believe Elon is looking for 25% control of Tesla because he is scared of what Tesla’s AI will do if he has less control? No. I don’t buy that for a second.
Am I worried that he will dump his shares in a very poorly planned manner like he did the first time? Yes, I am.
But once again, it is his money, sort of, and he can do whatever he wants with it. I think he did incredible work at Tesla, especially between 2018 and 2021. He deserves it.
However, I can believe all that and still understand why Judge McCormick had to invalidate the package in her decision.
There’s no doubt that this litigation started because lawyers saw an opportunity to make money. They enlisted a willing Tesla shareholder with just 9 shares. But you have to ask yourself, why was there an opportunity?
And that’s because of Elon and Tesla’s board. They saw that Tesla’s board presented the package as being negotiated between independent board members and Elon. They looked into those directors and saw that they were anything but independent.
The only board member on the compensation committee who could have been described as independent would have been Robin Denholm. She became Tesla’s chairwoman after Musk had to give up the seat as part of a settlement with the SEC over his botched attempt to take Tesla private, but she was also getting a juicy compensation package worth tens of millions of dollars for a job that Elon himself said was worthless.
Suspicious.
The lawyers made a bet that, based on this situation, they would find a lot more problems with how this historic compensation package came about, and they were right.
They found problems like the board not negotiating the package beyond aligning the tranches with Tesla’s own projections, Elon’s point person on the package being his own divorce lawyer who was also Tesla’s general counsel at the time—blurring the lines as to who he was actually working for, and more.
These are all things that could have affected shareholders’ decisions on whether to vote for or against the package. The judge had to rescind it.
But instead of addressing the governance issues highlighted by the judge and that led to this situation in the first place, Tesla, evidently led by Elon, decided to push a narrative that there’s no issue and that the only reason we shareholders are in this situation is that a politically motivated judge decided to take away our right to decide for ourselves what Elon should get for compensation.
Massive claims like that need strong evidence and as far as I can tell, there’s no strong evidence that the judge did anything other than follow the law. The only thing I’ve seen posted by Elon and his fans is the fact that the judge used to work for a firm that represented President Biden in the past, but it was one of the biggest firms in Delaware, which is where Biden is from so it’s not surprising and doesn’t prove any wrongdoing.
This narrative about the situation being politically motivated is simply an attempt to ignore and divert attention from Tesla’s governance issues.
At this point, I think Tesla and its shareholders would be way better off addressing these issues, going back to the drawing table on a compensation deal that is negotiated in good faith, and then going back to shareholders for a vote.
I even think that the deal could be the same amount minus all the costs that Tesla incurred related to this issue, like the legal costs and all the advertising that the company is spending on this vote.
The alternative is, more likely than not, years of costly litigation and this dark cloud over Tesla.
But a big part of the problem is that it doesn’t seem that Elon is interested in establishing proper governance at Tesla because he is not well suited to be an officer in a public company. That’s partly why he tried to take Tesla private – poorly, I might add.
Based on the rumors he is choosing not to deny, he seems to be happy leaving this choice to shareholders: proper corporate governance at Tesla or Elon. You can’t have both.
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Lectric Ebikes appears to be preparing for a major new product launch, teasing what looks like the next evolution of its wildly popular folding fat tire electric bike. Based on the clues, it looks like a new Lectric XP 4 could be inbound.
In a social media post released over the weekend, the company shared a minimalist graphic reading “XP4” along with the message “Tune in 5.6.2025 9:30AM PT.” That date – this Tuesday – suggests we’re just hours away from the big reveal of the Lectric XP 4.
If true, this would mark the next generation of the most successful electric bike in the U.S. market. The current model, the Lectric XP 3.0, has become an icon of accessible, budget-friendly electric mobility. Starting at just $999, the XP 3.0 offers a foldable frame, fat tires, a 500W motor, a rear rack, lights, and hydraulic brakes – all packed into a highly shippable design that arrives fully assembled. It’s the kind of package that has helped Lectric claim the title of best-selling e-bike brand in the U.S. for several years in a row.
With the XP 3.0 still going strong, the teaser raises plenty of questions. Will the XP 4.0 be a modest update or a major leap forward? Could we see new features like torque-sensing pedal assist, a location tracking option, or upgraded performance? Or is Lectric preparing a more comfort-oriented variant, maybe even with upgraded suspension or even more accessories included standard?
The teaser image, which features stylized stripes in grey, blue, and black, may hold some clues. One theory is that the colors represent new trim options or component upgrades. Another possibility is that Lectric is preparing multiple variants of the XP 4.0 – perhaps targeting commuters, adventurers, and off-road riders with purpose-built versions. We took the liberty of a bit of rampant speculation late last year, so perhaps that’s now worth a revisit.
At the same time though, Lectric’s penchant for launching new models at unbelievably affordable prices has never run up against such strong pricing headwinds as those posed by uncertainty in the current US-global trade war fueled by rapidly changing tariffs for imported goods.
Whatever the case, Lectric’s knack for surprising the industry with high-value, customer-focused e-bikes means expectations will be high. The brand has built a loyal following by delivering reliable performance at a price point that few can match, and any major update to the XP lineup is likely to ripple across the market.
As a young and energetic e-bike company, Lectric is also known for throwing impressive parties around the launch of new models. It looks like I may need to hop on a red-eye to Phoenix so I can see for myself – and so I can bring you all along, of course.
Be sure to tune in Tuesday at 9:30AM PT to see what Lectric has in store – and you can bet we’ll have all the details and first impressions as soon as they drop.
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Electric vehicles’ share of the market continues to climb in America’s second city, with BEV registrations up more than 50% in the first quarter of 2025 compared with the same period last year. Great news, but charging hasn’t up – but a new plan from Chicago Department of Transportation aims to build up enough infrastructure for the city to keep up.
In a bid to keep up with the rapid growth of EVs, Chicago Department of Transportation (CDOT is currently seeking public feedback on a plan called “Chicago Moves Electric Framework.” The city’s first such plan, it outlines initiatives that include a curbside charging pilot through the city’s utility, ComEd, and expanded charging access in key areas throughout the city.
Unlike other such plans, however, the new plan aims to focus on bringing electric vehicle charging to EIEC and low income communities, too.
“Through this framework, we are setting clear goals and identifying solutions that reflect the voices of our residents, communities, and regional partners,” said CDOT Commissioner Tom Carney. “By prioritizing equity and public input, we’re creating a roadmap for electric transportation that serves every neighborhood and helps drive down emissions across Chicago.”
Neighborhoods on the south and west sides of Chicago experience a disproportionate amount of air pollution and diesel emissions, largely due to vehicle emissions according to CDOT. Despite that, most of Chicago’s public charging stations are clustered in higher-income areas while just 7.8% are in environmental justice neighborhoods that face higher environmental burdens.
“Too often, communities facing the greatest economic and transportation barriers also experience the most air pollution,” explains Chicago Mayor Brandon Johnson. “By prioritizing investments in historically underserved areas and making clean transportation options more affordable and accessible, we can improve both mobility and public health.”
The Framework identifies other near-term policy objectives, as well – such as streamlining the EV charger installation process for businesses and residents and implementing “Low-Emission Zones” in areas disproportionately impacted by air pollution by limiting, or even restricting, access to conventional medium- and heavy-duty vehicles during peak hours.
The Chicago Moves Electric Framework includes the installation of Level 2 and DC fast charging stations in public locations such as libraries and Chicago’s Midway Airport, “supporting not only personal EVs but also electric taxis, ride-hail and commercial fleets.”
Chicago has a goal of installing 2,500 public passenger EV charging stations and electrifying the city’s entire municipal vehicle fleet by 2035.
Electrek’s Take
I hate to sound like a bed-wetting liberal here, guys, but Chicago is getting EVs absolutely right with big utility incentives on both vehicles and infrastructure, a governor willing to stand behind smart environmental policy, and a solid push for more and better infrastructure in the areas where they’ll do the most good. They’re even thinking of the children.
Here’s hoping more cities follow suit.
SOURCE: ComEd, via Smart Cities Dive; featured image by EVgo.
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