6On August 3, 2025, Tesla’s board unveiled a landmark compensation package, granting CEO Elon Musk approximately 96 million restricted shares worth nearly $30 billion. The move, disclosed in a regulatory filing and widely reported, is designed explicitly to retain Musk at the company amid ongoing leadership uncertainty and shareholder tension.
This new equity award follows a Delaware court’s January 2024 decision that invalidated Musk’s previously authorized 2018 pay package—then valued at over $50 billion—on the grounds of flawed disclosure and compromised board independence. Tesla has since appealed the ruling. The fresh grant includes conditions requiring Musk to remain in a senior leadership role through at least 2027 and imposes a holding period ending in 2030. Importantly, if the original package is reinstated, the interim award will be forfeited to avoid overlap.
Tesla’s board stated that Musk had not received meaningful compensation in nearly eight years and emphasized the necessity of his continued leadership in navigating the company’s transition toward AI, robotics, and autonomous mobility. The grant’s share purchase price is set at $23.34—significantly below the current market price—underscoring potential shareholder value upside should Musk maintain company guidance and direction.
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The stock market responded positively: Tesla’s shares rose by about two percent in pre-market trading following the announcement, indicating cautious endorsement from investors. Analysts noted that securing Musk’s leadership through 2027 provides continuity as the firm faces intensifying competition in electric vehicles and new ventures in AI and robotics.
However, the new package has reignited debates about executive compensation. Critics warn of reputational risks and corporate governance concerns, given Musk’s political visibility and controversies, including his affiliations during the Trump administration. The prior compensation plan had already attracted intense legal scrutiny, with the Delaware judge describing the original award as “unfathomable” and reflecting disregard for shareholder fairness.
The board’s reliance on a special committee led by independent directors Robyn Denholm and Kathleen Wilson-Thompson for this award is a move designed to address prior governance critiques. That said, the core tension remains: balancing the perceived strategic importance of Musk’s leadership with shareholder expectations for reasonable and defensible compensation.
In approving this extraordinary grant, Tesla reaffirmed its strategic bet on continuity and risk control—even amid investor skepticism. As the EV maker navigates product setbacks and proxy vote pressure, the board clearly signals that Musk remains central to its vision for future growth.
Looking ahead, shareholders will vote on a longer-term compensation plan at Tesla’s annual meeting in November. The outcome may ultimately determine whether Musk’s leadership remains synonymous with Tesla’s trajectory—and whether hefty equity awards become a precedent for retaining high-profile, founder-led CEOs in high-innovation sectors.
