Tesla has awarded Elon Musk $29 billion (£21.7 billion) worth of company shares, following a U.S. court ruling that voided his previous $56 billion compensation package.
The decision to offer the new shares comes as Musk’s ongoing legal appeal against a 2024 Delaware court ruling that declared his 2018 pay package “unfair to shareholders.” The original deal, the largest in U.S. corporate history, had been tied to ambitious performance milestones, all of which Musk met.
Tesla’s board said the new grant was essential to keeping Musk at the helm, particularly at a time when the global race for artificial intelligence talent is heating up.
“The war for AI talent is intensifying,” the board stated in a message to shareholders. “It is imperative to retain and motivate our extraordinary talent, beginning with Elon.”
In a post on X, the social media platform owned by Musk, the board described him as irreplaceable: “No one matches Elon’s remarkable combination of leadership experience and technical expertise.”
If Musk ultimately succeeds in reinstating the 2018 package, Tesla says he would return or forfeit the current share award to prevent a “double dip.” Still, the company reiterated its hope that the original $56 billion deal, linked to market cap, revenue, and profit goals would eventually be upheld, given that all performance conditions had been fulfilled.
Tesla defended the extraordinary scale of Musk’s compensation by highlighting his role in transforming the company into a dominant and profitable force in the electric vehicle and energy sectors.
Meanwhile, Musk maintains that shareholders not judges should determine executive compensation. His appeal claims that the Delaware court made legal errors in its decision to cancel his record-breaking package.
Industry analysts say the new share award is a pragmatic step to secure Musk’s commitment during a critical phase for the company.
Dan Ives of Wedbush Securities told the BBC, “The biggest asset for Tesla is Musk. The board needed to do this, and I believe it’s a huge step forward.” He added that in the current “AI arms race,” Tesla can’t afford to have a “semi-committed” leader.
