Tesla’s board has approved a new $29 billion stock grant for CEO Elon Musk, a move designed to keep him in the company during a pivotal transition to AI, robotics, and autonomous vehicles.
What’s in the Deal?
- 96 million restricted shares have been granted, each at an exercise price of $23.34, matching the canceled 2018 package. If Tesla shares stay above $300, the upside is substantial.
Musk must remain in a top executive role through August 2027 and hold the shares until August 2030.
- This award bridges a gap caused by the 2018 compensation plan, previously voided by a Delaware court as excessive and improperly approved.
- If the original 2018 package is reinstated, this interim grant will be forfeited or adjusted to avoid double compensation.
Why Now—and Why Controversial?
- Tesla is navigating slumping sales, strong competition (especially from China), and Musk’s political engagements that some investors say have harmed brand perception and profitability.
- The board sees Musk’s leadership as crucial to its efforts in AI and robotic ventures, including robotaxi and humanoid robot initiatives.
- Critics worry the massive award may undermine corporate governance norms and reduce performance incentives, given the deal’s minimal conditions beyond retention.
Legal and Governance Background
- In January 2024, Delaware Judge Kathaleen McCormick annulled Elon Musk’s $56 billion pay package, calling it “unfathomable” and lacking adequate shareholder safeguards.
- Tesla leaders responded by appealing and restructuring the company’s incorporation from Delaware to Texas. Shareholder re-votes have passed, though lawsuits continue.
Broader Implications for Tesla & Investors
- Musk, Tesla’s largest individual shareholder, currently holds around 13% of company shares. This new award could increase his stake to 15% or more if fully vested.
- Shares rose nearly 2–3% in pre-market trading following the announcement, as investors anticipated greater clarity over Musk’s long-term commitment.
- However, with Tesla’s stock down roughly 25% this year, concerns remain around product stagnation (e.g., Cybertruck delays) and Musk’s political involvement.
Why This Matters
- It reinforces Elon Musk’s key role at Tesla, at a time when leadership stability is seen as critical.
- The move tests board independence and shareholder power, amid a company facing significant internal and external pressures.
- It reflects Tesla’s bet on AI and robotics as the next growth frontier—and Musk as the necessary architect of that shift.
What Happens Next
- Tesla will put this interim award before shareholders at its annual meeting on November 6, 2025.
- A longer-term compensation plan is expected to follow if this proposal is approved.
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