Tesla Allocates $29 Billion Share Award to CEO Elon Musk

On August 4, 2025, Tesla Inc. announced the approval of a significant share award for its CEO, Elon Musk, comprising 96 million shares valued at approximately $29 billion. This strategic move is intended to retain Musk's leadership as he navigates the ongoing legal challenges regarding his previous compensation package.

In 2024, a Delaware court invalidated Musk's 2018 compensation plan, which was originally worth over $50 billion, due to concerns over the fairness of the approval process by Tesla's board. Musk initiated an appeal in March, arguing that the court's decision was based on several legal missteps.

Earlier this year, Tesla's board formed a special committee to review aspects of Musk's compensation, although specific details were not disclosed. As the company enters a pivotal phase, Musk, who holds a 13% stake in Tesla, is shifting his focus from developing an affordable electric vehicle (EV) platform to pursuing advancements in robotaxis and humanoid robotics, thereby redefining Tesla's identity as a leader in artificial intelligence and robotics rather than merely an automotive manufacturer.

The newly approved share award aims to enhance Musk's voting power, which he and Tesla's shareholders consider essential for maintaining his commitment to the company's objectives. The special committee expressed confidence that this incentive would encourage Musk to continue his leadership at Tesla, despite his numerous other business ventures and interests.

The committee also clarified that if the Delaware courts choose to fully reinstate Musk's original compensation package, the new share grant would either be forfeited or adjusted to prevent any overlap in benefits.

Notably, the interim share award is contingent upon Musk retaining a key executive position through 2027. Additionally, these shares come with a five-year holding requirement, allowing exceptions only for tax obligations or the purchase price. Musk is required to pay Tesla $23.34 per share for the restricted stock that vests, aligning with the exercise price of his previous compensation package.

In premarket trading, Tesla's stock rose by more than 2%. However, the company's shares have faced challenges this year, losing approximately 25% of their value amid declining sales attributed to an aging vehicle lineup, intensified competition, and Musk's political positions that have potentially alienated some consumers.

These issues have been exacerbated by recent reductions in U.S. government incentives for EV purchases. Musk acknowledged in a post-earnings call that diminishing subsidies might lead to a difficult few quarters for Tesla before anticipated revenue from self-driving technology and related services materializes in late 2026.

Data from S&P Global Mobility, provided exclusively to Reuters, indicates that Tesla's brand loyalty has declined since Musk's endorsement of former President Donald Trump last summer. Furthermore, the company's aging vehicle lineup is encountering stronger competition from established automakers like General Motors, Hyundai, and BMW. The Cybertruck, Tesla's only new model launched since 2020, has faced disappointing sales, contrasting Musk's forecasts of substantial annual demand.