Tesla has awarded CEO Elon Musk a massive interim compensation package valued at approximately $29 billion, amid ongoing litigation over his disputed 2018 pay package. The new package, consisting of 96 million restricted shares, was unanimously approved by Tesla’s board—excluding Musk and his brother Kimbal, who recused themselves from the process for obvious reasons.
This interim award comes as Tesla awaits a decision from the Delaware Supreme Court on the legality of Musk’s previous $56 billion compensation deal, which was struck down by a Delaware judge earlier this year over concerns about how it was negotiated.
That ruling is now under appeal, but with no timeline for resolution, Tesla’s board moved forward to issue what it described as a “good faith” award to recognize Musk’s past achievements and secure his continued leadership.
Terms of the New Compensation Package
Under the terms of the new arrangement, Musk will receive 96 million restricted shares—worth around $29 billion based on current share prices—subject to several conditions:
- Two-Year Vesting Period: Musk must remain in a senior leadership role at Tesla for the next two years.
- Purchase Price Requirement: He must pay $23.34 per share, matching the adjusted exercise price of the 2018 award.
- Mandatory Holding Period: Musk must hold the shares for at least five years from the grant date, with limited exceptions for tax or purchase price payments.
- No Double Dip: If Musk’s 2018 award is reinstated by the court, the interim award will be forfeited to prevent duplicate compensation.
Tesla emphasized that this grant was made using its existing 2019 Equity Incentive Plan, which does not require an additional shareholder vote.
However, the company plans to present a broader, long-term CEO compensation strategy for a vote at its upcoming annual shareholder meeting on November 6.
Justification: Retaining Musk During Critical Transformation
Tesla’s board justified the move by pointing to Musk’s pivotal role in transforming the company into a global leader in not just electric vehicles (EVs), but also artificial intelligence and robotics. In a letter to shareholders, board members Robyn Denholm and Kathleen Wilson-Thompson stated that Musk’s leadership is critical as Tesla pivots toward becoming a major player in AI and autonomous services.
“To be clear, losing Elon would not only mean the loss of his talents but also the loss of a leader who is a magnet for hiring and retaining talent at Tesla,” the board members wrote.”
The board also noted that Musk hasn’t received meaningful compensation since 2017, despite leading Tesla through a period of unprecedented growth. While the 2018 performance award met all its milestones, it remains in legal limbo following a shareholder lawsuit that challenged the integrity of its approval process.
Ongoing Legal Battle
Tesla’s move to award this interim package follows a series of legal challenges in Delaware, where a judge ruled that Musk’s involvement in crafting the 2018 plan made the approval process flawed. That decision triggered Tesla’s decision to reincorporate in Texas, where corporate governance laws are seen as more CEO-friendly.
The case remains before the Delaware Supreme Court. If the court ultimately reinstates the 2018 package, Musk’s new stock award will be voided to ensure he does not receive compensation from both arrangements.
Tesla shares rose nearly 3% in early morning trading following the announcement.
A Letter to Our Shareholders on the 2025 CEO Interim Award
— Tesla (@Tesla) August 4, 2025
Dear Fellow Tesla Shareholders,
Today we announce an important first step in compensating Elon Musk for his extraordinary work at Tesla. As you know, Elon has not received meaningful compensation for eight years since…
