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Tesla has awarded billionaire Elon Musk a substantial reward—a stock grant valued at $29 billion—in an effort to retain him as the company shifts its focus from vehicles to robotaxis and humanoid robots.
The automaker stated that the new arrangement demonstrates confidence in Musk’s leadership during a period marked by declining sales, fierce competition, and scrutiny over his political activities and other business pursuits.
Described as an “interim award,” the 96 million new shares serve as an initial, “good faith” gesture to honor Musk’s previous pay agreement from 2018, which was valued at over $50 billion but was invalidated by a Delaware court last year. Musk can claim the new shares if he remains in a senior executive role for another two years and if a court doesn’t reinstate the 2018 compensation package, which is currently under appeal.
Ownership of these shares requires Musk to hold them for five years and to purchase them at $23.34 each, matching the original exercise price of the 2018 grant. Tesla plans to put a longer-term executive compensation plan to a vote at its upcoming investor meeting on November 6.
This move aims to keep Musk—Tesla’s prominent figurehead and the mastermind behind its robotaxi initiatives—focused on steering the electric automaker through its transition into cybercabs and robotics, away from its traditional auto business.
It also appears to quell recent speculation that the company’s board may be losing patience with Musk, especially given the recent months of turmoil, including his foray into politics.
Granting Musk greater control of Tesla indicates that the board still regards him as the most suitable leader to navigate upcoming challenges. The company has faced declining sales due to an aging vehicle lineup, growing competition, and Musk’s right-leaning political stances, which have harmed its brand image.
Data from S&P Global Mobility, shared exclusively with Reuters, revealed a sharp decline in Tesla’s brand loyalty since Musk publicly supported former U.S. President Donald Trump last summer. Musk’s political involvement, along with his other business ventures like the AI startup xAI, has raised concerns about his dedication to Tesla, which is the primary source of his wealth. Musk has even threatened to leave the company unless he gains more influence over its direction.
This new stock award would boost Musk’s ownership stake in Tesla from roughly 12.7% to over 15%, based on data compiled by LSEG. Prior to this grant, Musk did not have an active compensation plan, and Tesla noted he hadn’t received significant pay since 2017. Given ongoing legal challenges regarding his 2018 remuneration, the company emphasized its desire to retain Musk’s “extraordinary talent.”
While acknowledging Musk’s diverse ventures and responsibilities, Tesla’s special committee, consisting of Chair Robyn Denholm and independent director Kathleen Wilson-Thompson, expressed confidence that this award will motivate him to stay with the company. Tesla also clarified that it will not record an immediate expense for this grant, as it does not currently expect the performance criteria to be met. However, it will reevaluate and recognize costs if the conditions become probable, including after the vesting period.
Although the proposed package is roughly one-third the size of the 2018 plan, Tesla’s share price has nearly doubled over the past year, potentially increasing the overall expense. Industry analysts like Lawrence Fossi, who critiques Tesla, predict that the compensation costs could be substantial. The special committee also stated that if courts fully reinstate the 2018 award, the new shares could be forfeited, preventing any “double dipping.”
Investors responded positively—Tesla’s shares gained nearly 2% in early trading, although the stock has declined about 25% this year overall. Shawn Campbell, an advisor for Camelthorn Investments and Tesla shareholder, remarked, “While billion-dollar compensation packages tend to raise eyebrows, it’s clear that investors have benefited from Musk’s leadership. This stock grant effectively binds Musk to Tesla for the next two years.”
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