economics

This year, in the US-China trade war and the grand military parade, China demonstrated economic and military strength that forced the United States to back down. However, Beijing merely displayed its power; various parties discovered that this giant does not know how to wield it.

The US paused its economic attacks on China, but the Dutch government directly “took control of” a Chinese-owned company in the Netherlands—Nexperia—through public authority. The EU expanded anti-dumping measures against China, with France as the main driver behind anti-China economic policies.

The US publicly acknowledged that China’s rising military power in the Western Pacific can no longer be suppressed and adjusted its global strategy to focus on the Western Hemisphere. Yet Japan shifted the Taiwan issue from strategic ambiguity to strategic clarity, adopting a more confrontational posture and challenging China’s bottom line. Regional countries, in various ways, have called for “peace” in the Taiwan Strait—support that amounts to nothing less than opposing China’s unification and indirectly endorsing Japan’s position. Meanwhile, the Philippines, mired in internal chaos, continued to provoke China in the South China Sea.

Since China has the capability to confront the US, it should have the ability to punish Europe, Japan, and the Philippines for their unfriendliness toward China. But Beijing did not do so. When facing challenges from these parties, it only issued symbolic verbal protests or took measures that failed to eradicate the problems—putting on a full defensive posture but lacking concrete and effective actions. As a result, events often started with thunderous noise but ended with little rain, fizzling out in the end.

From Beijing’s appeasement toward Europe, Japan, and the Philippines, all parties have reason to believe that China is a giant that doesn’t know how to use its own power. This presents a strategic opportunity for the weak to overcome the strong—especially now, as the US contracts its global strategy and distances itself from its allies. Maximizing benefits from China’s side is the rational choice.

For example, with Japan: Beijing responded to Tokyo’s intervention in the Taiwan issue with high-intensity verbal criticism, but its actions were inconsistent with its words. Although it revisited the “enemy state clauses” at the UN, raised the postwar Ryukyu sovereignty issue, and even conducted joint military exercises with Russia 600 kilometers from Tokyo, these actions were far less intense than the rhetoric. Even the verbal criticism cooled down after a month.

The US maintained a low profile on the China-Japan dispute, adopted a cool attitude toward Tokyo, and even indirectly expressed condemnation—likely the main reason Beijing de-escalated. This shows that China’s original intent in handling the incident was to force the US to “decouple” from Japan on the Taiwan issue and isolate Tokyo, which maintains close ties with Taipei.

Influenced by official attitudes, the Chinese people once again mistook official rhetoric for commitments, believing Beijing would go to war if necessary to eradicate Japan’s interference in internal affairs. After all, unresolved deep-seated hatred—akin to a sea of blood—remains between China and Japan. Moreover, this year marks the 80th anniversary of China’s victory in the War of Resistance Against Japanese Aggression, with various events held throughout the year to engrave in memory the national humiliation of Japan’s invasion of China.

But after Trump indirectly criticized Japan for provoking unnecessary disputes, Beijing seemed satisfied and stepped down gracefully. Although the dispute has not ended and continues to develop, like its handling of Philippine provocations, China has placed disputes with neighbors into long-term games, effectively shelving the issues—and causing the Chinese people renewed frustration.

After this three-way interaction, the asymmetry between Beijing’s words and actions has likely become deeply ingrained. In the future, it will be much harder for Beijing to mobilize the 1.4 billion people’s shared enmity.

The key point: In this dispute, who—China, Japan, or the US—gained the greatest substantive strategic benefits? So far, it’s hard to say who won the first round. China appeared to come out looking the best, preserving the most face, yet Japan also gained, and the US obtained leverage for future talks with China.

In the first round of this dispute, China strategically established the legitimacy of denying Japan’s intervention in the Taiwan issue, narrowing Tokyo’s diplomatic space for anti-China actions via Taiwan. Japan’s right wing advanced toward national normalization, hollowing out its peace constitution to cope with US strategic contraction; additionally, the Liberal Democratic Party regained public support. The US demonstrated its influence in East Asia—even after “withdrawing” its military to the second island chain—and raised its bargaining chips at the US-China negotiation table.

However, from a medium- to long-term perspective, Japan gains nothing worth the loss: the Ryukyu Islands will become a burden rather than an outer defense wall. The two major powers, China and the US, will orderly redraw their spheres of influence in East Asia; the US will gain a dignified pretext for abandoning Taiwan, while China will recover Taiwan at a lower cost.

Conversely, beyond the asymmetry between words and actions, there is also asymmetry between actions and strength. Beijing’s greatest loss is that the international community—especially its neighbors and Europe—has seen through China’s essence of appearing fierce but being timid inwardly. They have once again discovered that antagonizing China brings no adverse consequences; on the contrary, it can yield unexpected benefits—provided they give China the face it needs to achieve strategic gains.

For example, Vietnam: After the China-Japan dispute cooled, a Vietnamese warship transited the Taiwan Strait under the pretext of freedom of navigation without prior notification to China, signaling it is not a vassal of Beijing and aligning with Washington’s position.

Vietnam is a major beneficiary of the US-China confrontation, with massive Chinese goods rerouted through Vietnam to the US; transit trade has skyrocketed its economic growth. Thus, it firmly believes maximizing benefits lies in a neutral stance between China and the US. However, from a supply chain perspective, China is the supplier and the US the customer—the latter slightly more important. Factoring in China-Vietnam South China Sea disputes and China’s habitual concessions versus the lethal US carrot-and-stick approach, Vietnam naturally leans more pro-US.

Additionally, during the China-Japan dispute, Singapore’s prime minister publicly sympathized with Japan, while Thailand and Vietnam jointly called for peace in the Taiwan Strait—showing Southeast Asian nations, like Japan, hope to maintain the peaceful status quo in the Taiwan Strait and oppose military conflict in the region, which is equivalent to opposing China’s recovery of Taiwan. Of course, Northeast Asia’s South Korea holds the same view; some countries publicly state it due to internal and US factors, while others choose silence.

China’s neighboring countries all see the fact that the Philippines’ intense anti-China stance has gone unpunished. Despite deep internal political turmoil, Manila can still spare efforts to provoke China in the South China Sea—clearly a profitable path. Neighbors conclude: If China can concede on core interests, what can’t it concede?

On the other side of the globe, Europe has noticed this phenomenon too. The Dutch government rashly took over a Chinese enterprise, severely damaging China’s interests and prestige; Beijing’s response started strong but ended weakly—mainly to avoid impacting China-EU trade, even amid decoupling risks everywhere. No wonder Britain subsequently sanctioned two Chinese companies on suspicion of cyberattacks, unafraid of angering Beijing just before Prime Minister Starmer’s planned January visit to China.

In short, whether on the regional Taiwan issue or extraterritorial China-EU economic issues, China faces a broken windows effect. Although from a grand strategic view, all related events remain controllable for Beijing, appeasement only invites more trouble. It’s not impossible that China will eventually be unable to suppress public indignation and be forced to suddenly take tough measures—like at the end of the pandemic, when people took to the streets and Beijing immediately lifted lockdowns, rendering all prior lockdown justifications untenable overnight.

Indeed, China currently appears as a giant that doesn’t know how to use its power. But when a rabbit is cornered, it bites. When Beijing is forced to align actions with strength, the intensity will be astonishing; then, China will want more than just face.

There’s a saying: Attack is the best defense. But with its long history, this nation views offense and defense more comprehensively. The Chinese believe that when weak, attack is the best defense; when holding an advantage, defense is the best attack. As long as the opponent’s offense can be controlled within acceptable limits, persistent defense inflicts less damage than the opponent’s self-exhaustion in stamina. Conversely, when at a disadvantage, a full assault is needed to reverse it.

In other words, China doesn’t fail to know how to use power; it deems using power uneconomical. This explains why the West walks a path of decline while China continues rising—the latter accumulates power, and the former overdraws it.

President Trump is shrewd and pragmatic; he knows cornering China awakens the giant, so he eased US-China relations. But simultaneously, the US doesn’t mind—and even quietly encourages—its allies to provoke China, while positioning itself as a mediator to benefit. This is a reasonable tactic and the most effective offensive against China.

Xi Jinping once said China has great patience—implying that if patience is exhausted, the world will see a completely different China, one that uses power without regard for cost.

The Central Economic Conference in Beijing in December 2025 identified eight key tasks for China’s economic work in 2026. Several of these areas particularly interest me as a China expert. Among the most important tasks for China’s economic work in 2026 is promoting a policy of supporting service exports through various measures to boost household income, raise basic pensions, and remove restrictions in the consumer sector. What struck me most during the Central Economic Conference meetings in Beijing in December 2025 was its emphasis on China’s continued opening up. This will provide tremendous global growth opportunities by expanding trade and investment, especially in the technology and renewable energy sectors, deepening integration into global value chains, and increasing demand for resources. This will drive the global economy in conjunction with China and create new partnerships, focusing on “high-quality development” and “high-level opening up” as fundamental pillars for mutual benefit and to stimulate innovation within the Chinese economy.

–            Main Tasks of the Beijing Economic Conference in December 2025

1)       Providing a huge market and investment opportunities: By increasingly encouraging the opening of its doors to foreign companies, China will create diverse opportunities in various sectors such as technology, innovation, and services.

2)       Making the Chinese economy an engine of global growth: The recovery and growth of the global economy depend heavily on China’s contribution, which accounts for a large share of the global economy.

3) Expanding free trade: China strongly supports free trade and the signing of regional agreements, reducing barriers and promoting trade exchanges.

4) Expanding the wheel of Chinese overseas investment: By significantly deepening the contribution of Chinese direct investment abroad to the economic development of other countries.

5)       Promoting innovation-led development in China to accelerate the development of new growth engines in 2026: This will bring significant benefits to foreign consumers and investors.  The meeting approved a package of policies aimed at strengthening the role of companies in innovation and implementing a new round of measures to develop high-quality key industrial chains, deepening and expanding fields such as artificial intelligence, which will bring more innovation opportunities to the world.

– Sectors in which China will expand in the future:

A) Innovation and Technology: China is a leader in fields such as artificial intelligence, renewable energy, and agricultural technology, driving global innovation.

B) Advanced Manufacturing: China’s rapid transition to high-quality development focuses on industrial upgrading and technological innovation, creating new products and services.

C)     Promoting Globalization: China opposes protectionism and supports inclusive economic globalization, creating a more interconnected and integrated global economy.

D)     Building a Community with a Shared Future for Mankind: The ultimate goal of China’s economic growth is to achieve common development and improve livelihoods for all, promoting win-win international cooperation.

–             Areas of China’s contribution to global development and the global economy in 2026, through:

1)       Product supply: As the “world’s factory,” with a focus on advanced technology.

2)       Demand stimulation: China’s enormous demand for commodities, energy, and raw materials supports other economies.

3)       Knowledge and technology transfer: Through investments and joint ventures.

4)       Support for sustainable development: By focusing on clean energy and green sectors.

   Accordingly, we understand that the main tasks for 2026, identified during the Central Economic Conference in Beijing in December 2026, are comprehensive and diverse. Chief among them is building a strong domestic market in China, reflecting a future strategic direction for the Chinese economy. This will promote sustainable development, support high-quality growth, foster innovation-led development, and uphold openness to the outside world. This means providing broader development opportunities for foreign investment and achieving growth that is synchronized with the development of the Chinese economy.

The recent decision by the United States Navy (USN) to cancel the Constellation-class frigate program after eight years of development and billions of dollars in investment represents a significant setback in US naval modernization drive. The Constellation-class was meant to become a modern, multi-mission combat vessel capable of relieving operational pressure from Arleigh Burke-class destroyers and narrowing the growing numerical advantage of the China’s People’s Liberation Army Navy (PLAN). Instead, continuous design changes, and subsequent delays changed what was supposed to be an easy-to-construct warship platform into a costly and significantly delayed project. After failure of several major projects like Zumwalt destroyer and Littoral Combat Ships (LCS), the cancellation of the Constellation-class frigate project has degraded Washington’s efforts to sustain the naval balance of power against rapidly expanding naval fleet of PLAN.

The Constellation-class project was a product of USN’s urgent need to fill the gap left behind Oliver Hazard Perry-class (OHP) frigates which were phased out from USN services in 2015. The OHPs, despite lack of built-in vertical launch system (VLS), were regarded for their reliability, and versatility in missions ranging from open-ocean escorting to anti-submarine warfare (ASW) and anti-surface warfare (ASuW). The retired hulls of OHPs were purchased by navies of several US allies including Australia, Bahrain, Chile, Egypt, Pakistan, Spain, Taiwan, and Turkiye. Their withdrawal from USN created a capability void that the Littoral LCS program – comprising of Freedom class and Independent class vessels – was expected to fill. However the LCS encountered numerous mechanical failures in hulls and propulsion system, cost overruns, and capability gaps that rendered it unsuitable for missions in contested naval environments.

As USN halted further procurement and early retirement of LCS, it attempted to follow a new approach, i.e., opt for a proven design tailored to meet USN requirements. Franco-Italian FREMM frigate design was chosen as the baseline for a modern, affordable American Constellation-class frigate. At initial stage, it appeared a sound idea. The FREMM platform had already proven itself in European naval forces, and the USN specific variant was modified to carry 32 Mk-41 VLS cells capable of firing SM-series interceptors and even Tomahawk cruise missiles, alongside Naval Strike Missiles. This program committed to be a potent yet affordable and rapid addition in USN fleet while retaining 85 percent commonality with original design. But as USN continued to impose new requirements, complications in construction, and alteration in designing began to inhibit the efficiency of the program. Constellation-class frigate undertook major size increment than parent FREMM design, stretching from 466 feet to nearly 500 and increasing to over 7,200 tons. Instead of leveraging a proven design, USN trapped itself with a pseudo-original design which now shared mere 15 percent commonality with the original design. By 2024, the first frigate was already three years behind schedule, and the program’s cost enlarged well beyond initial estimations. Faced with increasing costs, long delays, and design complications, the USN eventually axed the Constellation-class frigate program too, leaving behind a significant gap in USN surface fleet which this frigate was supposed to fill.

USN now wants a new frigate class structured on proven American design by 2028. Reportedly, the design of US Coast Guard (USCG) Legend Class cutter will be used as baseline to develop a USN specific variant. These 4,600 tons class ships are capable of conducting blue water operations and support 57mm deck gun, Phalanx CIWS, and flight deck with hanger to support rotary wing operations.  Its USN specific frigate version can accommodate a 16-cell Mk-41 VLS module, 8x Harpoon/NSM cruise missiles in canisters, RIM-116 Sea RAM, and torpedo tubes. Using an American proven design for mass producing USN specific frigate of relatively smaller size and low tonnage will allow USN to produce and commission larger number of hulls in relatively less time. But on flip side, this new frigate class will be far less capable than recently cancelled Constellation-class as they are unlikely to carry Aegis CMS, and will have significantly less range, endurance, and weapon load-out.

Nowhere is this challenge more evident than in the rapid growth of China’s naval power. PLAN is now commissioning highly capable naval combatants including flat-deck aircraft carrier (Fujian), next generation destroyers (Type-055 and Type-52DL) and frigates (Type-54B), and new class of conventional as well as nuclear submarines. Chinese coast guard, and maritime militia collectively operate more than 750 vessels – more than twice the number of hulls under US control. While the US Navy still retains qualitative advantages, especially in nuclear submarines and carrier aviation, trends in shipbuilding capacity significantly favor Beijing. China commands more than half of global commercial ship production, while the US share barely registers at a tenth of a percent. This allows China to mass produce modern warships for PLAN at a pace the United States cannot simply match.

Although USN plans to expand its fleet from 296 manned warships to 381 manned warships and 134 unmanned vessels by 2045, but so far trends of decline hull strengths have been observed. Ticonderoga class cruisers are gradually retiring, next-generation DDG(X) destroyers are still in far future, Ford class nuclear aircraft-carriers and Columbia-class ballistic missile submarines (SSBNs) are facing delays, and Arleigh Burke Flight-III destroyers are not producing at rate faster enough to accommodate these growing gaps. Unmanned vessels are sometimes perceived as a viable solution to fill-up the gaps but these vessels cannot replace manned warships on one-on-one basis. In sum, aforementioned projects expose the persistent limitations of ship production capacity of US shipyards. The Congressional Budget Office estimates that reviving the shipbuilding sector to meet the USN long-term needs would require annual investments of more than $40 billion for three consecutive decades—a staggering commitment that would require political consensus and sustained strategic vision.

The cancellation of the Constellation-class frigate, just like past projects of Zumwalt and LCS- thus represents a persistent crisis in US naval build-up. As China accelerates its naval production and expands power projection into the Indo-Pacific, the United States finds itself struggling to revive its own shipbuilding capacity. Whether Washington can reverse this trajectory will depend on its ability to reform procurement processes, invest in industrial capacity, and adopt realistic designs aligned with strategic needs. Without such changes USN risks entering the next decade with too few ships to meet global demands.

The Central Economic Conference meeting in Beijing in December 2025 proposed that “adhering to opening up to the outside world and promoting win-win cooperation in various fields” should be one of the main tasks of China’s economic work in the coming year. In 2025, China issued the “Action Plan for Stabilizing Foreign Investment in 2025,” and simultaneously, the 8th China International Import Expo 2025 was held in Shanghai. It was also agreed that the Hainan Free Trade Port would officially launch island-wide independent customs operations on December 18, 2025. This would bring numerous opportunities and momentum to support China’s continued opening up for global economic development.

 The year 2026 marks the launch of China’s 15th Five-Year Plan. The Central Economic Conference was held in Beijing in December 2025, a significant historical juncture as the 14th Five-Year Plan drew to a close and the 15th began. This held particular significance, as the world looked to China’s economic planning for the coming year for inspiration and opportunities. China’s continued opening up in 2025 represents a vital engine for the global economy, contributing approximately 30% to global growth.

–            The opportunities and momentum generated by these policies are evident in the following areas:

1)       Deepening Institutional Opening through the Hainan Free Trade Port

  The launch of independent customs operations at Hainan Port on December 18, 2025, marked a milestone, transforming the port into a special customs zone governed by high-level international trade regulations.  With China’s ambitious trade facilitation plan, the percentage of duty-free goods in Hainan has risen from 21% to 74%, attracting significant investment. The island has already attracted more than 1.2 million enterprises.

2)       Stabilizing Foreign Investment (2025 Action Plan)

The “2025 Foreign Investment Stabilization Action Plan” aims to boost international investor confidence through practical measures, including opening new sectors by expanding pilot programs in telecommunications, healthcare, and education and supporting manufacturing and services by lifting restrictions on foreign investment across the entire manufacturing sector and encouraging investment in high-tech industries and green development. This has yielded numerous positive results for the Chinese economy, with China registering more than 49,000 new foreign-funded companies in the first half of 2025, representing a year-on-year increase of over 16%.

3)       China International Import Expo (CIIE 2025)

  The eighth edition of the expo in Shanghai solidified China’s position as a global launchpad for new products, achieving record-breaking figures. The expo saw record initial deals worth US$83 billion, a 4.5% increase over the previous year. With broad international participation, more than 4,500 companies from 138 countries participated, showcasing 461 new products and technologies.

4)       The Strategic Direction of the Chinese Economy for 2026 and Beyond

  The Central Economic Work Conference, held in Beijing in December 2025, affirmed that the main task for the coming year, 2026, is to ensure a strong start to the 15th Five-Year Plan (2026-2030) while achieving mutually beneficial cooperation. This will be accomplished by China focusing on aligning its domestic regulations with high-level international economic and trade standards in areas such as government procurement, e-commerce, and finance.  This should coincide with achieving sustainable growth in the Chinese economy, especially given the International Monetary Fund’s upward revision of its growth forecast for China to 5% for 2025, which underscores the resilience of the Chinese economy in the face of global shocks.

  Accordingly, we understand the extent of China’s aspirations to achieve new developmental and economic leaps during 2026, with numerous promising future opportunities available to China. It possesses the capacity to simultaneously improve the quality and scale of development, achieve a strong launch for its 15-year plan, and offer more ambitious investment and development opportunities to the world. 

Dealmakers in 2025 enjoyed a near-record year for mergers and acquisitions, despite a turbulent spring that threatened hopes of a broader revival. So far this year, there were 70 global deals valued at more than $10 billion each, 22 of them in the fourth quarter, according to Dealogic. Total deal value has surpassed $4.8 trillion, up 41% from 2024, though the number of deals fell 6% to 38,395, marking the second-largest year ever behind 2021.

The spike in mega deals reflects a growing focus on scale. “M&A today is all about the mega deals, the race for scale,” said Anu Aiyengar, JPMorgan’s global head of advisory and M&A. There were at least four deals above $50 billion, with two notable bids for Warner Bros. Discovery totaling over $80 billion and Paramount Skydance’s $108 billion hostile offer.

Drivers of Late-Year Rally

A more permissive regulatory environment in the U.S., coupled with a calmer macroeconomic outlook, is encouraging companies to pursue transformative deals. With antitrust scrutiny easing under the Trump administration, boards and executives are seizing opportunities for strategic acquisitions, according to Frank Aquila, partner at Sullivan & Cromwell.

Dealmakers also say valuations are rising, prompting companies to pay higher multiples while expecting their own stocks to maintain relative strength. “Valuations have been bid up and we’ve seen clients be more aggressive in terms of multiples,” said Lazard’s Mark McMaster.

Technology and AI Influence

Technology deals, particularly those tied to artificial intelligence, have played a prominent role. OpenAI raised $40 billion in funding led by SoftBank, and Aligned Data Centers was acquired for $40 billion. Morgan Stanley’s John Collins said companies are pursuing scale to invest in AI-driven changes, both in tech and across other industries.

Cross-Border and Global Trends

Cross-border M&A activity surged in 2025, reaching $1.24 trillion, the highest since 2021. U.S. and UK companies were the most targeted, while U.S., France, and Japan were the most acquisitive. Multinational companies, particularly from Europe and Japan, are investing in the U.S. to capitalize on the world’s largest market. China and Japan are also seeing strong outbound activity, with Japanese deal values boosted by high-profile transactions like OpenAI and Toyota Industries.

Corporate divestitures are rising, up 30% in volume from last year, exemplified by Holcim’s $30 billion spin-off of its North American business, Amrize. Private equity is also regaining momentum, with global buyouts reaching $1.1 trillion, a 51% increase from 2024.

Outlook for 2026

Dealmakers expect the M&A rally to continue into 2026, with $50 billion–$70 billion deals already in the pipeline and a $100 billion tech transaction not ruled out. Analysts see a multi-year run of high-value deals, fueled by scale-seeking corporations, AI-related opportunities, cross-border expansion, and corporate restructuring. While caution remains in politically uncertain markets like the UK, the global appetite for transformative deals appears set to drive another strong year for mergers and acquisitions.

With information from Reuters.

Tesla’s board of directors has earned more than $3 billion through stock awards since 2004, an amount that dwarfs compensation at other major U.S. technology firms. CEO Elon Musk’s brother Kimbal has earned nearly $1 billion, while director Ira Ehrenpreis collected $869 million and board chair Robyn Denholm $650 million. Most of these windfalls came from stock options that appreciated dramatically as Tesla’s share price soared.

Why It Matters
The outsized compensation raises questions about corporate governance and board independence. Experts argue that such high pay could compromise directors’ ability to objectively oversee Tesla and Musk, as a large portion of their wealth is tied to stock performance rather than cash. Critics also note that Tesla is one of the few major firms where directors are paid predominantly in options rather than shares, magnifying upside potential with limited downside risk.

Stock Option Controversy
Tesla directors have received compensation primarily through stock options, rather than shares. This practice allows them to profit if Tesla’s stock rises without incurring losses if it falls, unlike restricted stock which better aligns interests with shareholders. Between 2018 and 2024, Tesla directors averaged $1.7 million annually despite suspending pay for four years, more than double the average of Meta directors, the next highest-paid among the “Magnificent Seven” tech companies.

Legal and Governance Issues
Tesla’s board suspended new stock grants in 2021 following a shareholder lawsuit alleging excessive pay. The board has also faced scrutiny in a Delaware court over Musk’s 2018 compensation package, with the judge ruling that excessive pay and personal ties compromised CEO-pay negotiations. The board proposed a new pay package for Musk in 2024 potentially worth $1 trillion in Tesla stock over the next decade.

Stakeholders include Tesla’s board members, CEO Elon Musk, shareholders, corporate-governance experts, and the wider investment community. Oversight and accountability are central concerns, as compensation structures can influence board decisions and shareholder trust.

Comparison With Tech Peers
Other major tech firms like Alphabet, Meta, Apple, Microsoft, Amazon, and Nvidia (“Magnificent Seven”) have also seen stock-based wealth increases for directors, but none have granted awards as concentrated or directly tied to board service as Tesla. Lifetime earnings for Tesla directors far exceed peers when factoring in appreciated stock value.

What’s Next
Governance experts suggest reforms such as paying directors in restricted stock rather than options, and greater shareholder oversight of compensation plans. Tesla’s board must navigate the delicate balance of incentivising directors while maintaining independence in overseeing Musk and the company. Legal proceedings and shareholder scrutiny over Musk’s latest pay package are ongoing and may influence future board compensation practices.

Additional Considerations
The analysis raises broader questions about tech-sector governance, the risks of incentive structures tied to stock performance, and the potential misalignment between directors’ personal wealth and long-term shareholder interests. Tesla’s board, given its outsized compensation, will remain a focus for regulators and investors alike.

With information from an exclusive Reuters report.