Tesla’s CEO Elon Musk is poised to acquire roughly $29 billion in stock through a fresh compensation arrangement, designed to partially satisfy a $55.8 billion agreement from 2018 that was nullified by a U.S. court last year.
In a disclosure to the U.S. Securities and Exchange Commission (SEC) on Sunday, Tesla announced it will provide Musk with 96 million shares under a new 2025 CEO Interim Award. This award, sanctioned by shareholders, permits Musk to purchase the stock for approximately $2 billion at $23.34 per share — the same rate as his previously blocked 2018 package. This arrangement stipulates that Musk must maintain a senior leadership position at Tesla for two years and prohibits him from selling or transferring the shares for five years.
In a statement shared on Tesla’s official X account, directors Robyn Denholm and Kathleen Wilson-Thompson indicated that this package is an initiative to “honor the deal made [with Musk] in 2018.”
Musk’s 2018 compensation agreement was invalidated last year after a Delaware court determined that the board had failed in their duties to shareholders by authorizing the $55.8 billion deal without proper negotiation or assessment of Musk’s actual worth, simply acquiescing to his proposals. Both Tesla and Musk’s attempt to restore the 10-year package was also turned down.
Tesla has sought a ruling from the Delaware Supreme Court to reinstate the agreement. In the meantime, the company is exploring a different method to provide Musk additional billions. Denholm and Wilson-Thompson noted that the stock awarded to Musk this week represents about one-third of his 2018 package and acts as a preliminary measure while working on reinstating the entire deal.
“We have endorsed this award as an initial step, a ‘good faith’ payment to Elon,” they stated. “It is essential to retain and motivate our exceptional talent, starting with Elon…”
Should the Supreme Court rule in Tesla and Musk’s favor, the CEO would be required to return this week’s award or relinquish part of the 2018 package to avoid “double dipping.”
Denholm and Wilson-Thompson commended Musk’s “unmatched leadership,” aiming to illustrate his worth for such compensation. The court had considered $55.8 billion excessive in relation to Musk’s value to Tesla when blocking his 2018 package.
“No one rivals Elon’s remarkable blend of leadership experience, technical proficiency, and arguably most importantly, a verified history of creating revolutionary and lucrative businesses,” they stated.
The board’s esteem for Musk was also a factor in the court’s resolution to reject his 2018 package. The court observed that the adoration for Musk had even brought one director to tears, raising questions about whether they were acting in the interests of Musk or Tesla in crafting the $55.8 billion agreement.
Denholm and Wilson-Thompson’s X post noted that Tesla is developing a “longer-term CEO compensation strategy,” set to be voted on by shareholders on Nov. 6.
Recognized as the richest individual globally, Musk has a wealth exceeding $400 billion, surpassing Egypt’s GDP. When asked about his necessity for a substantial Tesla compensation package, Musk portrayed it as a desire for significant control over the company.
“I am uneasy about expanding Tesla to a leader in AI & robotics without having ~25% voting control,” Musk remarked. “Enough to influence decisions, yet not so much that I can’t be outvoted. If that isn’t achievable, I would prefer to create products outside of Tesla.”
Musk currently owns a 13 percent share in Tesla, making him the biggest stakeholder. This new agreement will elevate his stake to around 16 percent.
This year, Tesla has encountered considerable challenges, highlighted by a 71 percent decline in profits during Q1. The company faced reputational harm due to Musk’s involvement with the Trump administration, leading to decreased global sales, a drop in stock value, and at least one early investor calling for the CEO’s resignation. These challenges were worsened by problems with Tesla’s vehicles, including issues related to the company’s Robotaxis.
Musk seemed to withdraw from politics at the end of May, resigning from his informal role as head of the Department of Government Efficiency (DOGE) and indicating a desire to concentrate more on his companies. Nonetheless, he has since revealed plans to launch his own political party, a move likely to divert him from his business interests once more.