Board of Tesla greenlights £22 billion compensation plan to retain Elon Musk
In a significant development, Elon Musk, the CEO of Tesla, has received a new compensation package worth approximately $29 billion. Here's a breakdown of the key details and the background behind this new deal.
Value of Shares Received
The new package, announced in early August 2025, consists of 96 million shares of restricted stock, with a floor value of around $26 billion, depending on the outcome of ongoing litigation related to Musk's 2018 pay package. The value of the shares is based on a share price of $309.60.
Conditions Associated with the Pay Deal
The shares will vest on the second anniversary of the grant, in early August 2027, but only if Musk continues to serve as either CEO or chief of product development or operations throughout that period. Musk cannot sell any of these vested shares until five years from the date of the award, which would be August 3, 2030. Musk must pay $23.34 per share to acquire the stock, representing a significant discount compared to Tesla's current stock price of over $300.
Background and Motivation
The new deal comes amidst ongoing litigation over Musk's 2018 compensation plan, which was invalidated by a Delaware court. Tesla and Musk have appealed the decision. The new deal is intended to ensure Musk remains as CEO for several years, alleviating shareholder concerns and motivating him to lead Tesla through significant business transitions.
Musk, as the largest shareholder, holds a 12.7% stake in Tesla. Under the plan, Musk must pay Tesla $23.34 per share, totaling approximately £1.7 billion. The current legal battle does not seem to have affected the retention of Musk as CEO, as per Daniel Ives' statement.
Daniel Ives, an analyst at Wedbush Research, believes the share package will keep Musk as CEO of Tesla until at least 2030. Ives considers Elon Musk to be Tesla's most important asset. The 2018 pay award to Musk, worth £42 billion, was struck down by a judge last year due to being deemed excessive.
Tesla's shares rose by 2.2% following the news, reflecting the market's positive response to the new compensation package. The share package is considered an important first step in compensating Musk for his work, with the company's focus shifting towards AI and self-driving robo-taxis, as well as attracting new talent. The legal battle between Tesla and Musk is ongoing in Delaware. If the 2018 pay award ruling is reversed on appeal, Musk will forgo the £22 billion package.
In light of ongoing litigation over a previous compensation plan, Elon Musk, the CEO of Tesla, has received a new compensation package worth approximately $29 billion in August 2025. This new deal, based on technology-driven business strategies, is intended to ensure Musk's continued leadership, incentivizing him to guide Tesla through significant transitions, particularly in the realm of artificial intelligence and self-driving robo-taxis, while attracting new talent.
