In a significant move, Tesla has awarded its CEO, Elon Musk, shares amounting to approximately $29 billion (£21.7 billion). This decision aims not only to recognize Musk’s contributions but also to ensure his continued leadership at the company, especially amidst increasing competition in the tech sector, notably in AI.
This latest share allocation follows a court ruling from the United States that invalidated Musk’s 2018 compensation package, which had been valued over $50 billion. The court deemed that the previous arrangement was “unfair to shareholders,” prompting Musk to appeal the decision made by Delaware’s courts in 2024. Tesla’s board has expressed confidence that this considerable new set of shares will serve as an incentive for Musk to remain with the company during this critical period for Tesla and the broader technology landscape.
In a public statement shared on social media platform X, which is owned by Musk, Tesla’s board emphasized the necessity of retaining vital talent, beginning with Musk. They noted that his unique blend of experience and expertise is unmatched within the industry, underscoring the critical role he plays in Tesla’s growth and innovation. Moreover, the board pointed out that Musk holds a “proven track record” of successfully building pioneering and lucrative businesses.
Under the conditions of his latest compensation deal, if the Delaware court reinstates Musk’s previous pay structure, he would forfeit or return the newly awarded shares to prevent receiving a “double dip.” The board maintains optimism regarding Musk’s chances of regaining his original $56 billion pay package, which would set a new record for corporate remuneration in the United States. This deal was meticulously structured, designed so that Musk would only receive compensation based on achieving specific operational milestones, such as expanding Tesla’s market value, increasing sales, and generating underlying profit. Reports suggest that Musk successfully met these ambitious targets.
Through his appeal, Musk contends that the lower court made several legal errors in rescinding his compensation package and has previously argued that remuneration should ultimately be a decision left to shareholders. This latest share grant aligns strategically as tech companies in the AI sector are fiercely competing by enticing top talents from their rivals with lucrative offers. Notably, Facebook’s Mark Zuckerberg has been mentioned as attempting to attract developers from OpenAI with high-paying job offers, further illustrating the intense battle for skilled professionals in this field.
Tesla’s leadership emphasizes that the company is currently at a pivotal juncture. As it expands its focus from solely electric vehicles to include AI and robotics, Musk’s stewardship is deemed essential. The board also highlighted that the recent share award would be particularly appealing to Musk given the increasing demands on his time, especially considering his involvement in various other ventures, including xAI, Neuralink, and The Boring Company, which specializes in creating tunneling solutions for infrastructure.
In light of Musk’s multifaceted responsibilities, he has publicly declared that he would reduce his political engagements, notably after his tenure as an advisor to former U.S. President Donald Trump. With Tesla aiming to solidify its position in the rapidly evolving landscape of AI, the company hopes this financial incentive for Musk will bolster its strategic ambitions and further its innovative pursuits.
An additional contribution to this report was provided by Liv McMahon. The situation continues to evolve, and the implications of Musk’s new share allocation may significantly shape Tesla’s future endeavors, further intertwining his career trajectory with the tech giant’s aspirations.
