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Tesla Inc. has approved a substantial interim compensation package for CEO Elon Musk, granting him 96 million shares valued at approximately $29 billion based on Friday’s closing price. The award was issued under the company’s 2019 Equity Incentive Plan and is intended to retain Musk’s leadership amid strategic shifts and ongoing legal disputes.
📈 Background and Purpose
The interim award follows the Delaware Court of Chancery’s 2024 decision to void Musk’s original 2018 compensation plan, which had a potential value exceeding $50 billion. That ruling cited flaws in the board’s approval process and concerns over shareholder fairness. Tesla is currently appealing the decision.
In the meantime, the board’s special compensation committee—comprising Chair Robyn Denholm and independent director Kathleen Wilson-Thompson—approved the new package as a “good faith” measure to recognize Musk’s contributions and incentivize his continued leadership.
🧾 Terms of the Award
- Musk must remain in a top executive role for at least two years to qualify.
- He must purchase the shares at $23.34 each, matching the exercise price of the 2018 plan.
- The shares are subject to a five-year holding period, except for tax or purchase-related transactions.
- If the 2018 package is reinstated by the courts, the interim award will be forfeited or offset, preventing any “double dip” in compensation.
🚗 Strategic Context
Tesla is undergoing a major transformation, shifting focus from its core electric vehicle business to robotaxis, AI, and humanoid robotics. The board emphasized that retaining Musk is critical to navigating this transition and maintaining investor confidence.
Despite recent controversies—including Musk’s political affiliations and declining vehicle sales—Tesla’s directors reaffirmed their belief that he remains the best-suited leader to guide the company forward.
