Tesla CEO Elon Musk will gain approximately $29 billion in shares under a new compensation package, in an effort to at least partially adhere to a $55.8 billion deal from 2018 which was thrown out by a U.S. court last year.
In a filing to the U.S. Securities and Exchange Commission (SEC) on Sunday, Tesla announced that it shall grant Musk 96 million shares under a new 2025 CEO Interim Award. Already approved by shareholders, the award enables Musk to purchase the stock for around $2 billion at $23.34 per share — the same price that was agreed to in his blocked 2018 compensation package. This new deal requires Musk to take a senior leadership role at Tesla for the next two years, and prohibits him from selling or transferring the shares for five years.
Posting a lengthy statement on Tesla’s official X account, directors Robyn Denholm and Kathleen Wilson-Thompson stated that this compensation package is another effort to “honor the bargain that was struck [with Musk] in 2018.”
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Musk’s 2018 Tesla compensation package was thrown out last year after a Delaware court found the board of directors had breached their duty to shareholders when establishing the $55.8 billion deal. Specifically, Tesla’s directors had failed to negotiate or evaluate the value Musk actually provided, instead simply agreeing to whatever the billionaire proposed. Tesla and Musk’s later bid to reinstate the 10-year compensation package was also rejected, the judge unimpressed by their attempt to overturn a U.S. court judgement with a subsequent shareholder vote.
Tesla has since taken the matter to the Delaware Supreme Court in hopes of having the deal restored. In the meantime, the company is also trying another tactic to grant its billionaire CEO further billions. In their statement, Denholm and Wilson-Thompson said that the stock given to Musk under this week’s new award amounts to approximately one third of his total 2018 compensation package, and is considered an interim measure while they work on reinstating the whole deal.
“[W]e have recommended this award as a first step, ‘good faith’ payment to Elon,” they wrote. “It is imperative to retain and motivate our extraordinary talent, beginning with Elon…. While we recognize that Elon’s business ventures, interests and other potential demands on his time and attention are extensive and wide-ranging, including his leadership roles at xAI, SpaceX, Neuralink, X Corp., and The Boring Company as well as his other interests, we are confident that this award will incentivize Elon to remain at Tesla…”
If the Supreme Court ultimately rules in Tesla and Musk’s favour, the CEO will be required to either return this week’s award or forfeit a portion of the 2018 package so that “there cannot be any ‘double dip.'”
“[W]e have recommended this award as a first step, ‘good faith’ payment to Elon.”
Denholm and Wilson-Thompson also repeatedly praised Musk as demonstrating “unmatched leadership,” an apparent effort to demonstrate what value he offers that could merit such outsized compensation. The court had considered $55.8 billion disproportionate to the value Musk offered Tesla when deciding to block his 2018 compensation package.
“[N]o one matches Elon’s remarkable combination of leadership experience, technical expertise, and, arguably most importantly, decades-long proven track record of building the most revolutionary and profitable businesses across different industries,” they wrote.
The board’s breathless admiration for Musk was also considered in the court’s decision to throw out his 2018 compensation last year. Noting at the time that veneration of the billionaire had even moved one director to tears, the court found that it was unclear whether they were acting for Musk or Tesla in making the $55.8 billion deal.
Denholm and Wilson-Thompson’s X post states that Tesla is currently working on a “longer-term CEO compensation strategy,” which will be put to a shareholder vote on Nov. 6.
The richest man in the world, Musk has a current net worth of over $400 billion, which exceeds the GDP of Egypt. Responding in January to people questioning why he’d need a large Tesla compensation package to motivate him, Musk framed it as a matter of wanting dominant control over the company.
“I am uncomfortable growing Tesla to be a leader in AI & robotics without having ~25% voting control,” Musk wrote. “Enough to be influential, but not so much that I can’t be overturned. Unless that is the case, I would prefer to build products outside of Tesla.”
Musk currently has a 13 percent stake in Tesla, making him the company’s largest shareholder. This new deal will increase his stake to around 16 percent.
Tesla has struggled significantly this year, experiencing a 71 percent drop in profit during Q1. The company suffered considerable reputational damage due to Musk’s work with the Trump administration, with sales down globally, stock falling, and at least one early investor calling for the CEO to resign. Such problems haven’t been helped by issues plaguing Tesla’s vehicles themselves, including a growing list of incidents with the company’s Robotaxis.
Musk appeared to take a step back from politics at the end of May, leaving his position as de facto head of the Department of Government Efficiency (DOGE) and expressing his intention to spend more time focusing on his various companies. However, he has since stated that he intends to start his own political party, a venture that seems likely to draw him away from his businesses once more.
