Tesla (TSLA) Stock: Musk Gets $29 Billion Payday to Stay at the Wheel

TLDR

Table of Contents

Tesla granted CEO Elon Musk 96 million new shares worth approximately $29 billion as an interim compensation package
The award aims to keep Musk at Tesla after a Delaware court voided his original $50 billion pay package in 2024
Shares must be held through 2027 and come with a five-year holding period, with Musk paying $23.34 per share
Tesla stock jumped 2.5% in premarket trading following the announcement
The company’s China deliveries dropped 8.4% in July, adding to ongoing sales challenges

Tesla’s board has approved a massive new compensation package for CEO Elon Musk, granting him 96 million shares worth about $29 billion. The move comes as the electric vehicle maker battles to keep its high-profile leader focused on the company.

The interim award follows a Delaware court ruling in January 2024 that voided Musk’s original compensation package. That deal was worth over $50 billion when the court struck it down, citing flawed approval processes that were unfair to shareholders.

Tesla’s board formed a special committee to handle the compensation matter. The committee stated in Monday’s regulatory filing that the new award would incentivize Musk to stay with Tesla despite his other business ventures.

“We are confident that this award will incentivize Elon to remain at Tesla,” the committee wrote. They emphasized that losing Musk would mean losing both his talents and his ability to attract top talent to the company.

The new share award has specific conditions attached. Musk must remain in a key executive role through 2027 for the shares to vest. He also faces a five-year holding period, except for covering tax payments or purchase costs.

Musk will pay Tesla $23.34 per share for the restricted stock that vests. This price matches the exercise price from his 2018 compensation package that was later voided by the courts.

Tesla shares rose more than 2% in premarket trading after the announcement. The stock price jumped to $310.22 ahead of Monday’s opening bell.

Market Response and Current Challenges

The positive market reaction comes despite ongoing challenges for Tesla. The company’s stock has lost about 25% of its value this year as sales have declined.

Tesla faces multiple headwinds in 2025. The company’s aging vehicle lineup struggles against increased competition from traditional automakers like General Motors, Hyundai, and BMW.

Cybertruck. Rocket. Starbase.
No CGI. Just Texas. pic.twitter.com/yJUBuEAe11
— Matt Simpson (@mattinator66) August 3, 2025

The Cybertruck, Tesla’s only new model since 2020, has failed to meet expectations. Despite Musk’s predictions of hundreds of thousands in annual sales, the vehicle has underperformed in the market.

Recent data shows Tesla’s brand loyalty has dropped since Musk endorsed former President Donald Trump. Research firm S&P Global Mobility shared this information exclusively, highlighting how political stances can affect consumer preferences.

Government policy changes have also hurt Tesla. Reduced federal support for electric vehicles has created additional pressure on the company’s sales performance.

Company Strategy and Future Plans

Musk has been shifting Tesla’s focus from affordable electric vehicles to robotaxis and humanoid robots. This strategic pivot positions Tesla more as an artificial intelligence and robotics company than a traditional automaker.

The CEO currently holds a 13% stake in Tesla, making him the company’s largest shareholder. The new compensation package is designed to gradually increase his voting power over time.

If Delaware courts fully reinstate Musk’s 2018 compensation award, the new interim grant will be forfeited or offset. Tesla has built in protections to prevent any “double dip” scenario.

Tesla’s China operations continue to face pressure. July deliveries of China-made vehicles fell 8.4%, adding to the company’s global sales challenges.

Musk warned investors during last month’s earnings call about potential “rough quarters” ahead. He cited waning government subsidies as a key concern before expected revenue from self-driving software arrives late next year.

The compensation committee believes keeping Musk engaged is critical for Tesla’s future success. With his attention split across multiple companies including SpaceX and X, the board sees the pay package as essential for maintaining his focus on Tesla’s mission

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