Tesla has granted CEO Elon Musk a massive new pay package worth $29 billion, just six months after a Delaware court voided his original $56 billion compensation deal from 2018.
The award gives Musk 96 million Tesla shares, requiring him to pay $23.34 per share – the same price as his voided 2018 package. To keep these shares, Musk must remain in a top executive role for at least two years and hold the shares for five years.
“Elon has delivered transformative and unprecedented growth,” wrote Tesla board chair Robyn Denholm and director Kathleen Wilson-Thompson in a letter to shareholders. They claimed Musk had not received “meaningful compensation” for eight years.
The award comes amid ongoing legal battles over Musk’s original compensation. In January 2025, Delaware Chancellor Kathaleen St. Jude McCormick voided the 2018 package, ruling that Musk had engineered it through “sham negotiations with directors who were not independent.” Tesla appealed this decision in March, and if the original package is reinstated, the new award will be forfeited.
The timing is significant as Tesla faces multiple challenges. The company’s shares have plunged 25% this year, with quarterly profits dropping from $1.39 billion to $409 million in its most recent report. Revenue has also fallen, with Tesla missing even lowered Wall Street expectations.
Much of Tesla’s struggles stem from increasing competition from both American automakers and Chinese EV companies. Additionally, the company has faced consumer backlash over Musk’s political activities, particularly his support for President Donald Trump.
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Wedbush analyst Dan Ives believes the new pay package could stabilize Tesla’s leadership situation. “We believe this grant will now keep Musk as CEO of Tesla at least until 2030 and removes an overhang on the stock,” Ives wrote. “Musk remains Tesla’s big asset.”
The award increases Musk’s stake in Tesla from about 13% to approximately 15%, giving him greater control as the company shifts focus. Tesla is transitioning from purely electric vehicles toward robotaxis and humanoid robots – positioning itself more as an AI and robotics company.
Tesla’s board formed a special committee earlier this year specifically to address Musk’s compensation. The interim award is designed as a “good faith” payment while legal proceedings continue over the original package.
Concerned investors have been watching these developments closely. Last month, under pressure from shareholders, Tesla scheduled an annual meeting for November 6, where a longer-term CEO compensation plan will be put to vote.
The compensation comes at a pivotal moment for Tesla. The company faces not only increased competition but also questions about Musk’s divided attention across his many ventures, which include SpaceX, X (formerly Twitter), xAI, and Neuralink.
Some shareholders worry about Musk’s commitment to Tesla given his other activities. The new agreement doesn’t limit his ability to pursue other business ventures or political work, despite concerns that these activities have damaged Tesla’s brand and sales.
As Tesla navigates this transition period, the board’s massive award signals their belief that Musk remains essential to the company’s future success – despite recent challenges and controversies. For Tesla investors, the key question remains whether this expensive retention strategy will help the company regain momentum in an increasingly competitive electric vehicle market.
