TLDR: Tesla’s board has approved a new compensation package for CEO Elon Musk, granting him 96 million shares valued at approximately $29 billion. This move aims to ensure his continued focus on the company, particularly as it transitions towards artificial intelligence and robotics. The decision comes amidst an ongoing legal battle over his previous 2018 compensation package, which was voided by a Delaware court.
Tesla’s board of directors has formally approved a substantial new compensation package for Chief Executive Officer Elon Musk, awarding him 96 million shares, an equivalent of approximately $29 billion. This significant grant, announced on August 4, 2025, is primarily aimed at securing Musk’s long-term commitment and leadership as the electric vehicle giant undergoes a pivotal strategic shift towards artificial intelligence and robotics.
The board’s decision comes in the wake of a protracted legal dispute concerning Musk’s original 2018 compensation package, which was valued at over $50 billion. In 2024, a Delaware court voided that package, ruling it was excessive and unfair to shareholders due to flaws in the approval process. Musk has since initiated an appeal against this ruling, asserting that the lower court judge made multiple legal errors.
According to a filing by Tesla’s special committee, the new award is designed to incentivize Musk to remain at the helm, stating, ‘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 that this award will incentivise Elon to remain at Tesla.’ The company’s board further emphasized on X, ‘It is imperative to retain and motivate our extraordinary talent, beginning with Elon.’ This sentiment was echoed in communications to shareholders, where Tesla highlighted that ‘Retaining Elon is more important than ever before,’ citing the ‘ever-intensifying AI talent war and Tesla’s position at a critical inflection point.’
The new share award is structured to gradually increase Musk’s voting power within the company, raising his stake from approximately 13 percent to 16 percent. The terms of the new compensation require Musk to remain in a key executive role through 2027, with the shares vesting under this condition and subject to a five-year holding period. Additionally, Musk is required to pay $23.34 per share as they vest, matching the exercise price from his 2018 award. Should the 2018 package be reinstated upon appeal, the new interim grant would be forfeited or offset to prevent any duplication.
Tesla is currently at a critical juncture, with Musk increasingly shifting the company’s focus from its traditional electric vehicle platforms to ambitious projects like robotaxis and humanoid robots, effectively repositioning Tesla as a leading AI and robotics firm rather than solely an automaker. This strategic pivot is seen as crucial for the company’s future growth.
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The announcement positively impacted Tesla’s stock, with shares rising more than 2 percent in pre-market trading. However, the company faces ongoing challenges, including declining sales, intensified competition from global automakers, and recent political controversies involving Musk’s relationship with former US President Donald Trump, which have reportedly led to a sales backlash and a reduction in support for EVs from the Trump administration. Musk himself has acknowledged that Tesla could face ‘a few rough quarters’ as US subsidies diminish.
