Tesla’s board of directors has granted CEO Elon Musk a new compensation package valued at nearly $29 billion, marking one of the most significant executive paydays in corporate history. This move comes several months after a Delaware court rejected Musk’s previous 2018 performance award, following shareholder lawsuits that challenged the size and structure of that package. Currently, Musk is appealing that decision, but the company has proceeded with an interim package to reward his leadership and secure his continued guidance at Tesla.
Structure of the pay package
The latest arrangement includes 96 million Tesla shares, each currently trading above $300. Musk is required to pay $23.34 for each share—the strike price from his original 2018 deal—giving him access to stock at a significant discount. If exercised, the grant would boost his stake in Tesla from about 13 per cent to roughly 15 per cent of the company. Tesla emphasized in its official communication to shareholders that Musk has “not received meaningful compensation for eight years,” underscoring the company’s intent to maintain his focus and ambition during turbulent times.
Rationale: Retention, transformation, and shareholder value
In a letter to shareholders, board members Robyn Denholm and Kathleen Wilson-Thompson credited Musk with delivering the “transformative and unprecedented growth” necessary to fulfill the milestones of the 2018 CEO Performance Award. They highlighted that this growth has “translated into immense value generated for Tesla and all our shareholders”. The board also cited a “war for AI talent” as a central motive for retaining Musk, noting that top technology companies are now offering multi-billion-dollar incentives to secure leaders in artificial intelligence, robotics, and automated mobility.
Tesla’s leadership insisted the present package is not just recognition for past achievements but a strategic step to keep Musk at the helm as the company seeks to transition from primarily an electric vehicle (EV) company to a leader in AI, robotics, and related services. Recent years have seen Tesla invest heavily in its AI-powered robotaxi project and autonomous driving technology—ventures considered crucial for the company's future.
Controversy: Political distraction and company headwinds
This enormous compensation comes during a challenging period for Tesla. The company’s share price has tumbled 25% in 2025 amid falling EV sales and intensifying competition from both US and international rivals. Meanwhile, Musk angered some shareholders by devoting time and resources to US politics, backing Republican campaigns and policies that some say have indirectly hurt Tesla’s reputation and bottom line. Political opponents staged protests at Tesla dealerships, and President Trump’s policy decisions have stripped Tesla and other American EV manufacturers of key tax incentives for buyers and regulatory credits—once a major contributor to Tesla’s revenue stream.
Forward focus: AI, robotics, and market transformation
Despite these hurdles, the board’s unprecedented pay package hinges on the belief that Musk’s vision is essential to Tesla’s ongoing reinvention. With AI, robotics, and the company’s much-touted (though now scaled down) robotaxi initiative at the center of future growth, board members assert that “retaining Elon is more important than ever before”. The new stock award also requires Musk to maintain a senior leadership role for at least two more years, ensuring continuity as Tesla attempts to navigate its next wave of technological transformation.
In conclusion, while the board’s move is not without critics—especially amidst legal battles and operational struggles—it signals Tesla’s commitment to Musk’s leadership during a defining chapter in the company’s evolution.
