Tesla awards Elon Musk a staggering $29 billion compensation package, struggles to push for a $55.8 billion payout
Tesla Approves New Compensation Package for Elon Musk Worth $27-29 Billion
After two U.S. court decisions in 2021 invalidated Elon Musk's 2018 Tesla compensation package due to shareholder notification and governance concerns, Tesla's board has approved a new package to replace the original arrangement. This new package, announced in August 2025, grants Musk a restricted stock award valued around $27-29 billion.
The 2018 mega-grant, originally authorized based on ambitious performance milestones, was struck down by Delaware courts twice, with rulings citing inadequate shareholder disclosure and conflicts of interest. In response, Tesla's board has introduced a "replacement" pay package that ensures Musk will receive a comparable equity award if the original package is invalidated on appeal. This grant includes stringent vesting and holding requirements to align Musk’s incentives with shareholder interests.
The new grant involves 96 million restricted shares at a strike price of $23.34 (the original 2018 price), vesting in August 2027, with a restriction against selling them until 2030. Unlike the original award with multiple complex performance milestones, the new deal requires mainly that Musk remain with Tesla in an executive role for two years and hold the shares for an extended period, thereby simplifying the payout conditions.
Musk retains shares worth billions already, and this new package would increase his ownership percentage from approximately 13% to 15% of Tesla’s stock. The new award is part of Tesla's strategy to retain Elon Musk amid competitive pressures in AI and advanced technology sectors such as robotics and robotaxis.
The court found that the directors failed to negotiate or evaluate the value Musk actually provided. Directors Robyn Denholm and Kathleen Wilson-Thompson praised Musk as demonstrating "unmatched leadership" and having a "remarkable combination of leadership experience, technical expertise, and proven track record of building revolutionary and profitable businesses across different industries."
Musk is prohibited from selling or transferring the shares for five years. If the Supreme Court rules in Tesla and Musk's favor, Musk will be required to return this week's award or forfeit a portion of the 2018 package. The new award is a part of an effort to honor the bargain that was struck with Musk in 2018.
In summary, while litigation over the original 2018 plan remains unresolved with the appeal pending, Tesla has proactively established a substantial, conditioned replacement compensation plan to secure Musk’s long-term leadership and align his interests with shareholders under clearer terms.
- Despite the court rulings that invalidated Elon Musk's 2018 Tesla compensation package, technology companies like Google and AI-focused businesses are continuing to compete for Musk's leadership, noting his 'unmatched leadership' and 'remarkable combination' of skills.
- The new compensation package, worth $27-29 billion, approved for Elon Musk by Tesla's board in August 2025, is a reflection of the company's efforts to retain its CEO amidst fierce competition in technology, AI, robotics, and robotaxis, as well as other industries.
- The new compensation package comes with stringent vesting and holding requirements for Musk, ensuring his interests remain aligned with those of the shareholders, a concern previously highlighted by the court in the 2018 package.
- The streaming and entertainment industry, no stranger to high-profile deals, may find the latest developments in Musk's compensation package at Tesla interesting, as it simplifies the payout conditions compared to the original, complex award.
- As the original 2018 plan remains in legal limbo due to an ongoing appeal, tech giants like Google, pioneering businesses in various sectors, and everyday news consumers following general-news or sports platforms may keep an eye on the evolution of Elon Musk's compensation at Tesla.
- Twitter users, active in various domains such as tech, finance, business, sports, and general-news discussions, have already expressed their opinions on the new compensation package granted to Elon Musk by Tesla, highlighting its potential impact on the future of the company and the broader tech industry.
