Business

IIE DIGITAL DESK : Tesla’s board approved a massive stock grant worth approximately $29 billion for CEO Elon Musk on August 4, 2025, aiming to retain his leadership while a prior $56 billion pay package from 2018 remains legally entangled. The interim grant comprises 96 million restricted shares, priced at about $23.34 per share—matching the 2018 valuation—and is contingent on Musk continuing in a top executive role for at least two more years .

This new award was endorsed by a special committee of Tesla’s board, including Chairwoman Robyn Denholm, and represents a "good faith" move intended to honor “a deal is a deal” after a Delaware court voided Musk’s earlier compensation package as unfair to shareholders and improperly approved .

Should the Delaware courts ultimately reinstate the 2018 package, Tesla has stipulated that the new grant will be forfeited to avoid Musk receiving dual payouts. Likewise, if Musk leaves Tesla before the vesting period ends, the shares may be withdrawn .

The board emphasized Musk’s significant contributions: Tesla's market valuation soared by $735 billion under his tenure since 2018. Analysts see this as essential not only for stability but also for steering Tesla into emerging arenas like robotaxis, humanoid robotics, AI, and services—key strategic pivots for the company’s future .

Despite current headwinds—such as a stock price decline of approximately 20–30% this year, falling revenue, and escalating competition—shareholders unanimously endorsed the award (with Musk and Kimbal Musk recusing themselves).Tesla’s shares rose roughly 2% immediately after the announcement, signaling market relief amid ongoing uncertainty .

The move also reflects Tesla’s broader imperative to keep Musk focused, given his involvement in multiple ventures such as SpaceX, xAI, Neuralink, and The Boring Company. The board noted intense competition in the AI talent space and highlighted that Musk’s unique leadership is central to its position in the technological arms race .

This compensation package arrives in the wake of legal fallout from the 2018 award, which a Delaware judge ruled invalid due to flawed board procedures and undue influence from Musk. Tesla is actively appealing that ruling while pursuing governance reforms to prevent future disputes .

Critics argue the staggering sum reflects the board’s limited leverage over its iconic leader and raises questions about corporate governance norms. Despite the controversy, Tesla shareholders previously approved the original deal by a four-to-one margin, underscoring Musk’s enduring influence .

In summary, Tesla’s $29 billion stock grant is a calculated gamble to anchor Elon Musk through critical growth phases, reinvigorate investor confidence, and avoid leadership drift. The package illustrates high-stakes corporate calculus, balancing legal risk, executive retention, and strategic ambition at the heart of one of the world's most valuable companies.