Tesla has granted CEO Elon Musk shares worth about US$29-billion (R520-billion) in a new pay deal aimed at keeping the billionaire entrepreneur at the helm during a crucial pivot from its struggling core car business to robo-taxis and humanoid robots.
The company described the “interim award” of the 96 million new shares as a first step, “good faith” payment to honour Musk’s more than US$50-billion pay package from 2018 that was struck down by a Delaware court last year.
Musk can claim the new award if he remains in a top executive role for another two years and a court does not reinstate the 2018 package currently on appeal.
He has to hold the shares for five years and can buy them for $23.34/share, the same as the exercise price of the 2018 award. Tesla will also put to vote a longer-term CEO compensation plan at its annual investor meeting on 6 November.
The move is meant to keep Musk, the public face of Tesla and architect of its robo-taxi strategy, focused on the electric vehicle maker as it navigates a shift to cybercabs and robotics from its mainstay car business.
It also seems to quell any speculation that the board’s patience with Musk could be wearing thin because of the recent tumultuous months, including the CEO’s foray into politics. The move to give Musk greater control of the company suggests that directors still see him as best-suited to tackle Tesla’s growing list of challenges in the years ahead.
Sales have been falling at the company due to its ageing vehicle line-up, tough competition and Musk’s right-wing political stances that have tarnished its brand.
Threatened to leave
S&P Global Mobility data showed on Monday that Tesla’s brand loyalty had plunged since Musk endorsed US President Donald Trump last summer. Musk’s involvement in politics and his wider business empire, including AI start-up xAI, have also sparked concerns about his devotion to Tesla, the main source of his wealth. Musk has threatened to leave unless he gets more control over Tesla.
The new stock award will take his Tesla stake, already the largest, to more than 15% from the 12.7% currently, according to Reuters calculations based on data compiled by LSEG.
Read: Tesla faces ‘rough quarters’ as sales plunge
Before Monday’s grant, Musk had no active compensation plan and Tesla said he had not received meaningful pay since 2017. With the legal fight over his 2018 package expected to continue, the board said it moved to retain Musk’s “extraordinary talent”.
“While we recognise Elon’s business ventures, interests and other potential demands on his time and attention are extensive and wide-ranging … we are confident this award will incentivise Elon to remain at Tesla,” said a special committee Tesla formed this year to consider Musk’s compensation. It consists of chair Robyn Denholm and independent director Kathleen Wilson-Thompson.
Investors and analysts welcomed the news, with Tesla shares rising nearly 2% in early trading. The stock has lost a quarter of its value this year, as of last close.
“Under normal circumstances, a compensation package in the billions would raise some eyebrows. But clearly investors have benefited from Musk’s stewardship of Tesla,” said Camelthorn Investments adviser Shawn Campbell, who owns Tesla shares. “This stock grant will bind Musk to Tesla for the next two years.”
Read: Tesla’s cure for Musk’s missteps is … more Musk
The Delaware ruling on Musk’s 2018 pay package, the largest in Corporate America, had cited flaws in the board’s approval process and unfairness to investors. Musk kicked off an appeal against the order in March, claiming a lower court judge made multiple legal errors in rescinding the record compensation. — Aditya Soni, with Tom Hals, Zaheer Kachwala, Jaspreet Singh and Akash Sriram, (c) 2025 Reuters
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