Tesla Approves Share Award Worth $29 Billion In 'Good Faith' To Elon Musk
Tesla has granted its CEO Elon Musk shares worth $29 billion as part of a new deal to retain the tech billionaire as the company shifts focus from its struggling core auto business to robotaxis and humanoid robots.
The grant of 96 million new shares was described by the company as a 'good faith" payment to honour Musk's over $50 billion pay package from 2018 that was struck down by a Delaware court last year, according to Reuters. A longer-term CEO compensation plan will be put to a vote at its annual investor meeting on November 6.
The Delaware ruling pointed to flaws in the board's approval process and deemed the deal unfair to investors. Musk began an appeal in March, arguing that the lower court judge made several legal errors in overturning the record compensation package.
'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," the committee said in Monday's filing.
The new shares will vest only if Musk continues in a key executive position through 2027. They must be held for five years, except when used to cover taxes or to pay the $23.34 per-share purchase price, matching the exercise price of the 2018 package.
Why Was Musk Awarded?
This share award is aimed at gradually boosting Musk's voting power, which he and shareholders have deemed crucial for keeping him focused on Tesla's mission, according to a special committee Tesla formed earlier this year to consider Musk's compensation.
Musk owns a 13% stake in the automaker company and is attempting to position it more as an AI and robotics company amid falling sales in its mainstay auto business and a slump in its share price.
If the Delaware courts fully reinstate the 2018 CEO Performance Award, the new interim grant will either be canceled or adjusted to prevent any 'double dip," according to the filing with the Securities and Exchange Commission.
'This is simply a repackaged version of what was done years ago and was ruled improper by a judge," said Charles Elson, founding director of the Weinberg Center for Corporate Governance at the University of Delaware. '"It renders the Delaware court decision effectively meaningless."
Tesla's Problems
Tesla's stock has come under pressure this year as it lost about a quarter of its value while dealing with a sales decline wrought by its aging vehicle line-up, tough competition and Musk's political stances that have alienated some buyers.
The challenges have been worsened by US government cutting support for EVs. Musk said at a post-earnings call last month that the waning subsidies could lead to a 'few rough quarters" before a wave of revenue from self-driving software and services begins late next year.
S&P Global Mobility data showed that Tesla's brand has plunged since Musk endorsed US President Donald Trump last year. However, the two had a bitter public spat, and Musk has raised fears about whether he will be able to devote enough time and attention to Tesla after he locked horns with Trump by forming a new political party.
(with Reuters inputs)
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August 04, 2025, 19:57 IST
News business Tesla Approves Share Award Worth $29 Billion In 'Good Faith' To Elon Musk
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