A Tesla Model S is parked in front of Oslofjorden, Oslo, Norway, April 9, 2025.
Image: REUTERS/Marie Mannes
Tesla's board of directors has earned more than $3 billion through stock awards that far exceeded the value of those given to peers at the biggest U.S. technology firms at the time they were paid, according to an analysis performed for Reuters by compensation and governance specialist Equilar.
The analysis found CEO Elon Musk's brother Kimbal has earned nearly $1 billion since 2004, based on the appreciated value of stock options held or liquidated.
Director Ira Ehrenpreis has collected $869 million since 2007. Board chair Robyn Denholm has made $650 million since 2014.
Directors reaped such windfalls even though they haven't awarded themselves new stock grants since 2020.
The board agreed to suspend director compensation starting in 2021 to settle a shareholder lawsuit alleging excessive board-member pay. Between 2018 and 2020, however, the average Tesla director received a total of about $12 million in cash-and-stock compensation.
That was about eight times as much as the average director at Alphabet, the next highest-paid among the "Magnificent Seven" companies over the same period.
The value of those original awards skyrocketed along with Tesla's share price in subsequent years.
That's also true of the other six firms in the Magnificent Seven – Nvidia, Alphabet, Meta, Apple, Microsoft and Amazon, which got that name because their soaring stocks have been a big driver of the long-running bull market.
But Tesla is the only company among that cohort where the size of directors' original stock awards played such an outsized role in the vast wealth they've earned from these part-time jobs, the Equilar analysis shows.
Tesla directors' average compensation between 2018 and 2024 – including the four years of suspended pay – was still two-and-a-half times that of Meta directors, the next highest-paid over the seven-year period.
In a statement to Reuters, a Tesla spokesperson said its directors' compensation "is not excessive but directly tied to stock performance and shareholder value creation."
The statement added that board members provide extraordinary service to Tesla and devote "substantial time and effort," for example, by attending 58 full-board or committee meetings in 2024. The spokesperson said that meeting frequency was well above industry norms.
Tesla's board also paid itself in stock options instead of shares, a rare practice criticised by some corporate-governance specialists because it magnifies directors' upside potential with no downside risk.
Tesla directors have exercised tens or hundreds of millions of dollars in options to date but also continue to hold similarly large amounts, Equilar found.
Stock options are the right to buy the company's stock after a specified period for a preset price. Option holders face no risk, corporate-governance experts say, because they're not required to buy the stock if its value drops below the preset price. If it appreciates, they can buy the shares at a discount and immediately unload them at a profit.
Instead, many governance experts advise boards to pay directors in shares to align their interests with shareholders.
When directors directly own shares, rather than options to buy shares, the value of their holdings drops if their company's stock price falls. Only 5% of the largest 200 companies in the S&P 500 by revenue issue directors options, according to the National Association of Corporate Directors.
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