Tesla grants CEO Elon Musk $29 billion stock award amid leadership retention strategy

Tesla is doing everything it can to retain its CEO, Elon Musk, and has awarded him massive compensation. According to a letter from the Special Committee of the Boards of Directors posted on Tesla’s X account, Musk will receive $29 billion in restricted shares to encourage him to lead the company through its transition into “a leader in AI, robotics and related services.”

Musk was due a hefty compensation in shares in 2018, which was approved by a shareholders’ vote. However, one of the investors, Richard J. Tornetta, challenged the pay package in court, and Kathaleen McCormick, chancellor of a Delaware Chancery Court, ruled in 2024 that Musk should not receive the $56 billion payment.

Tesla shareholders once again voted in favor of the award, but Chancellor McCormick overruled the result yet again. Interestingly, Tesla was instructed to pay Tornetta’s lawyers $345 million in legal fees, rather than approximately $5.5 billion in Tesla stock that they had requested.

The new payment structure includes 96 million shares, but requires Musk to serve continuously in a senior leadership role for a period of two years. There is also a mandatory holding period of five years from the grant date.

The payment, however, will be forfeited if the 2018 CEO Performance Award is reinstated fully by the Delaware courts, as Tesla is appealing the ruling.

Musk has hinted at being worried about having less control over Tesla and the risk of being kicked out by activist investors. This interim pay package will address his concerns by incrementally increasing his voting rights upon grant.