Tesla has granted its CEO, Elon Musk, a $29bn (£21.7bn) share award in an effort to retain the billionaire’s leadership amidst growing competition in the tech industry. This decision follows a ruling by a U.S. court that deemed Musk’s 2018 pay package, valued at more than $50bn, unfair to shareholders.
Musk has been appealing the Delaware court’s decision, made in 2024, and on Monday, Tesla assured its shareholders that the new share award would serve as an incentive for Musk to remain at the company, especially given the increasing competition for artificial intelligence (AI) talent.
Tesla’s board expressed confidence that the $29bn in shares would motivate Musk, stating on X (a platform owned by Musk) that retaining and motivating exceptional talent, especially Musk, was crucial for the company. They emphasized that no one could match his combination of leadership experience and technical expertise, and he had a proven track record of building revolutionary and profitable businesses.
The share award will likely increase Musk’s voting power on Tesla’s board, which could have significant implications. However, Tesla stated that if the Delaware court ultimately reinstates Musk’s original 2018 pay package, he would return the $29bn share award to avoid receiving double compensation.
In the original 2018 deal, Musk’s pay was structured around achieving specific performance targets, such as increasing Tesla’s market value, sales, and profits. The deal had no guaranteed salary or bonuses, but Musk met all the targets laid out in the agreement. If reinstated, this would make it the largest pay deal in corporate American history, worth a staggering $56bn.
Musk’s appeal to reinstate his pay package argues that the lower court made legal errors when invalidating the deal. He has previously stated that it should be up to Tesla’s shareholders to decide on pay, not the courts.
Dan Ives, an analyst at Wedbush Securities, told the BBC that this share award was a necessary move for Tesla to keep Musk at the helm. He added that Musk is Tesla’s most significant asset, and it was essential for the board to take action, especially as the company competes in the growing AI industry.
As the race for AI dominance intensifies, major tech firms, including Facebook and Microsoft, have been offering significant pay deals to attract top AI talent. Tesla, too, recognizes that it cannot afford to have Musk only partially committed, especially as the company shifts its focus from electric vehicles to AI and robotics. The company said the $29bn share award would be especially appealing to Musk, considering his other ventures, including roles at xAI, Neuralink, and The Boring Company.
Tesla emphasized that the share award reflects the company’s need for Musk’s leadership during a critical time, as it transitions into the AI and robotics space, which is expected to shape its future growth.
Musk, who has also served as an advisor to former U.S. President Donald Trump, recently announced that he would be stepping back from politics to focus more on his various ventures.