Tesla grants Musk a $29 billion compensation package to maintain him as the CEO.
Tesla Awards Elon Musk $29 Billion in Stock as Part of Strategic Retention Plan
Tesla has granted CEO Elon Musk shares worth $29 billion (€25 billion) as part of a strategic retention plan, aiming to keep him focused on the company's pivot towards AI, robotics, and related services. This new compensation package comes as a response to the 2018 pay package dispute, which was voided by a Delaware court due to concerns over its fairness and approval process.
The original 2018 mega-grant, worth over $50 billion, was deemed unfair to shareholders, and Musk appealed the decision. In the meantime, Tesla's board established the new $29 billion award as a "replacement" package, with stronger incentives and protections for shareholders. Unlike the 2018 package, the new deal requires Musk to stay at Tesla for two more years and hold the shares at least until 2030.
A special committee formed by Tesla's board stated that the award aims to incentivize Musk to remain at Tesla. The ruling, which upheld her order that Tesla revoke Musk's multibillion-dollar pay package, was made by Delaware judge Kathaleen St. Jude McCormick, who argued that Musk engineered the pay package in sham negotiations with directors who were not independent.
Tesla's profit plunge this year has prompted Musk to promise change at the company. The company is facing flagging sales and intensifying competition from both the big Detroit automakers and China. Despite these challenges, investors and analysts reacted positively to the deal, causing Tesla shares to rise nearly 2% in early trading.
Robyn Denholm and Kathleen Wilson-Thompson, Tesla board members, mentioned that Musk is a "magnet for hiring and retaining talent" at Tesla. However, Musk's focus on political pursuits has left some investors worried. The grant is part of an "interim award" and a "good faith" payment to honor Musk's 2018 pay package.
In summary, the 2025 $29 billion stock award is both a strategic retention tool considering Musk’s multiple ventures and a legal and governance response to the earlier court ruling that invalidated his massive 2018 compensation plan. Tesla is hoping that this move will help secure Musk's long-term commitment to the company and steer it towards becoming a leader in AI, robotics, and related services.
- Despite Europe's concern over Elon Musk's involvement in politics, especially his frequent engagement in America's political landscape, the $29 billion stock award by Tesla indicates a strong desire to retain him, with the aim of steering the company towards becoming a leader in AI, robotics, and related services.
- The finance sector is keeping a close eye on the latest development in Tesla's compensation plan for Elon Musk, as the $29 billion stock award could potentially influence the company's future in terms of business and technology, given Elon Musk's influence on finance markets, with shares rising nearly 2% in response to the deal.
- With the increased focus on AI, robotics, and related services, Elon Musk's commitment to Tesla could have significant implications for technology advancements, not just in America, but potentially across Europe and other parts of the world, given the wide-reaching impact of such innovations on the global economy.
