AUSTIN, TX – In a move aimed at securing the long-term commitment of its leader, Tesla's board of directors has approved a new compensation package for CEO Elon Musk, awarding him 96 million shares of restricted stock valued at approximately $29 billion. This decision comes just months after a Delaware court invalidated a previous, more generous pay package from 2018.
The new award, which has been described as a "first step, good faith" measure by the company, is designed to keep Musk focused on Tesla's future at a time of significant challenges. Tesla has faced a difficult year, with its stock down 25% amid a general slowdown in EV sales, intense competition from both legacy automakers and Chinese rivals, and declining brand loyalty. The company’s most recent quarterly earnings report showed a 12% year-over-year revenue decline, the sharpest drop in more than five years.
Despite these headwinds, the board's special committee stated that Musk's leadership is critical to navigating the company's transition from an automaker to a technology and AI-driven powerhouse. Tesla's future growth strategy is centered on autonomous robotaxis and humanoid robots, a vision that the board believes only Musk can deliver.
The new pay package is not without strings attached. Musk must remain in a key executive role through 2027 for the shares to vest and is required to pay the same $23.34 per share exercise price as the 2018 deal. The board also clarified that if the original 2018 package is reinstated on appeal, this new award will be forfeited or offset, ensuring "no double dip" for the CEO.
News of the new compensation plan appears to have been received positively by investors, with Tesla's stock rising in pre-market trading following the announcement. However, some analysts and critics question whether such a massive incentive is the most effective way to ensure Musk's attention, given his involvement in other ventures like SpaceX and xAI.
In other recent news, a Florida jury recently found Tesla’s Autopilot system partly responsible for a 2019 fatal crash, ordering the company to pay hundreds of millions in damages. The company has stated it believes the verdict is "wrong" and sets back the development of life-saving technology.
