Tesla Awards Elon Musk $29 Billion in Shares Amid Ongoing Legal Battle Over 2018 Compensation
August 4, 2025, 9:25 PM IST – Tesla has granted CEO Elon Musk 96 million shares of restricted stock, valued at approximately $29 billion, as an interim compensation package, according to a regulatory filing on Monday. This move comes six months after a Delaware court ordered the company to revoke Musk’s unprecedented $56 billion 2018 pay package, which was deemed improperly negotiated. The new award aims to secure Musk’s leadership as Tesla pivots from its core electric vehicle business to ambitious ventures in robotaxis and humanoid robotics, amidst a challenging financial and competitive landscape.
Details of the New Award
The electric vehicle maker disclosed that Musk must pay $23.34 per share for the restricted stock as it vests, matching the exercise price of the 2018 package. The shares will vest in two years, provided Musk remains in a senior leadership role, and come with a five-year holding period, except for tax payments or the purchase price. If the Delaware Supreme Court reinstates the 2018 package, currently under appeal, the new award will be forfeited or offset to prevent double compensation. Tesla’s special committee described the grant as a “good faith” payment to honor the original agreement while addressing shareholder concerns.
Legal Context: The 2018 Pay Package Saga
In December 2024, Delaware Chancellor Kathaleen St. Jude McCormick reaffirmed her January 2024 ruling in Tornetta v. Musk, striking down Musk’s 2018 compensation package—valued at up to $56 billion at its peak—due to flawed negotiations with non-independent directors. The package, the largest in corporate history, included performance targets that Tesla met, but McCormick ruled it unfair to shareholders. Musk appealed in March 2025, arguing the judge erred, while Tesla shareholders reapproved the package in June 2024. The case remains before the Delaware Supreme Court, with Tesla’s lawyers asserting that the second shareholder vote should reinstate it. The court also awarded plaintiff attorneys $345 million in fees, rejecting their $5 billion stock request.
Strategic Move Amid Tesla’s Challenges
Tesla’s board, facing pressure from shareholders concerned about Musk’s focus given his extensive ventures (SpaceX, Neuralink, xAI) and political involvement, framed the award as critical to retaining his “extraordinary talent.” A letter to shareholders noted Musk has not received “meaningful compensation” since 2017, citing his role in Tesla’s 2,000% stock growth over the past decade, compared to the S&P 500’s 200% rise. Wedbush analyst Dan Ives called the grant a “strategic move” to keep Musk as CEO until at least 2030, removing a “constant concern” for investors. However, critics like Charles Elson, who supported voiding the 2018 package, argue the new award risks repeating governance flaws, as it lacks performance-based conditions beyond Musk’s tenure.
Tesla is grappling with a 25% stock decline in 2025, driven by Musk’s affiliation with President Donald Trump and intensifying competition from Detroit and Chinese automakers. The company reported a profit drop from $1.39 billion to $409 million in its latest quarter, with revenue falling short of Wall Street’s lowered expectations. The Cybertruck’s underperformance and an aging vehicle lineup have further strained Tesla’s market position. The board’s decision to grant the shares, leveraging Tesla’s recent move to Texas from Delaware, aims to stabilize leadership during this pivot to AI-driven ventures.
Mixed Reactions and Future Outlook
The stock rose over 2% in premarket trading on Monday, reflecting some investor optimism. Camelthorn Investments’ Shawn Campbell, a Tesla shareholder, noted that Musk’s leadership has driven significant value, justifying the award despite its scale. Conversely, critics argue the board, including Musk’s close associates, continues to prioritize his interests over shareholders, especially given Tesla’s profit slump and Musk’s divided attention, including his role in Trump’s administration. A group of over 20 shareholders recently demanded transparency for Tesla’s November 2025 annual meeting, where a longer-term compensation plan will be voted on.
The $29 billion award underscores Tesla’s reliance on Musk as its “top asset” while raising questions about corporate governance and fairness. As the Delaware appeal looms, the outcome will shape Musk’s compensation and Tesla’s future trajectory.
For updates, follow Tesla’s regulatory filings or credible financial news outlets like Reuters and CNBC.