Tesla awards Elon Musk $37 billion in shares to stay focussed

Straits Times

2 days ago

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The move suggests that directors still see him as best-suited to tackle Tesla's growing list of challenges.
Bengaluru - Tesla has granted chief executive Elon Musk shares worth about US$29 billion (S$37 billion) in a new pay deal aimed at keeping him at the helm a crucial pivot for the struggling electric vehicle maker.
The move is meant to keep Mr Musk, the public face of Tesla and architect of its robotaxi strategy, focussed on the company as it navigates a shift to cybercabs and robotics from its mainstay auto business.
It also seems to quell any speculation that the board's patience with Mr Musk could be wearing thin because of the recent tumultuous months, including the CEO's foray into politics.
The company described the 'interim award' of the 96 million new shares as a first step, 'good faith' payment to honour Mr Musk's more than US$50 billion pay package from 2018 that was struck down by a Delaware court in 2024.
Mr Musk can claim the new award if he remains in a top executive role for another two years and a court does not reinstate the 2018 package currently on appeal.
The move to give Mr Musk greater control of the company suggests that directors still see him as best-suited to tackle Tesla's growing list of challenges in the years ahead.
Sales have been falling at the company due to its ageing vehicle line-up, tough competition and Mr Musk's right-wing political stances that have tarnished its brand.
S&P Global Mobility data shared exclusively with Reuters showed on Aug 4 that
Tesla's brand loyalty had plunged since Mr Musk endorsed US President Donald Trump last summer.
Mr Musk's involvement in politics and his wider business empire, including AI startup xAI, have also sparked concerns about his devotion to Tesla, the main source of his wealth. Mr Musk has threatened to leave unless he gets more control over Tesla.
The new stock award will take his Tesla stake, already the largest, to more than 15 per cent from the 12.7 per cent currently, according to Reuters calculations based on data compiled by LSEG.
Before Aug 4's grant, Mr Musk had no active compensation plan and Tesla said he had not received meaningful pay since 2017. With the legal fight over his 2018 package expected to continue, the board said it moved to retain Mr Musk's 'extraordinary talent.'
Talent magnet
'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 this award will incentivise Elon to remain at Tesla,' said a special committee Tesla formed in 2025 to consider Mr Musk's compensation.
The new shares will also be forfeited or offset if the Delaware courts fully reinstate the 2018 stock award, ensuring there is no 'double dip,' it said.
Investors and analysts welcomed the news, with Tesla shares rising nearly 2 per cent in early trading. The stock has lost a quarter of its value in 2025.
'Under normal circumstances, a compensation package in the billions would raise some eyebrows. (But) clearly investors have benefited from Musk's stewardship of Tesla,' said Camelthorn Investments adviser Shawn Campbell, who owns Tesla shares. 'This stock grant will bind Musk to Tesla for the next two years.'
Battle for pay
The Delaware ruling on Mr Musk's 2018 pay package, the largest in Corporate America, had cited flaws in the board's approval process and unfairness to investors. Mr Musk kicked off an appeal against the order in March.
He argued that the package resulted in spectacular growth for Tesla and yet was determined by the lower Court of Chancery to be unfair to shareholders, who voted twice to approve the plan.
Tesla shares have risen nearly 2,000 per cent over the past decade, far outperforming the around 200 per cent rise in the benchmark S&P 500 index in the same period.
'This is simply a repackaged version of what was done years ago and was ruled improper by a judge. It renders the Delaware court decision effectively meaningless,' said Mr Charles Elson, founding director of the Weinberg Centre for Corporate Governance at the University of Delaware.
'You don't have to incentivise him to stay. If he leaves, he throws away 13 per cent of the company, which is still a huge part of his net worth, said Mr Elson, who had filed amicus briefs supporting the court's decision to void Mr Musk's 2018 award. REUTERS