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Tesla Approves $29 Billion Share-Based Compensation Plan for Elon Musk Amid AI Talent War
August 4, 2025
Tesla’s board of directors has approved a new compensation package for CEO Elon Musk, valued at approximately $29 billion in company shares. The move is meant to secure Musk’s continued leadership as Tesla navigates a critical moment in its AI and robotics ambitions.
The grant, structured under a previously approved 2019 Equity Incentive Plan, does not require a new shareholder vote. The award consists of 96 million shares that will vest in two years, contingent upon Musk remaining in a senior leadership role and holding the stock for five years. Unlike his previous pay package, this one is not tied to performance metrics such as stock price or revenue milestones.
This new deal arrives during an intensifying war for artificial intelligence talent and as Musk increasingly divides his attention between Tesla and his independent ventures — including xAI, which owns the social platform X. Musk has publicly stated he may halt AI and robotics work at Tesla unless he receives greater control, an ultimatum that preceded the board's renewed compensation effort.
Despite the headline value, the award is not guaranteed. It hinges on a pending decision from the Delaware Supreme Court, which could reinstate Musk’s controversial 2018 pay package — previously struck down by a judge who ruled that it was improperly negotiated. If that earlier award is restored, the current deal would be voided to prevent Musk from receiving both.
In anticipation of these legal challenges, Tesla created a special board committee led by chair Robyn Denholm and board member Kathleen Wilson-Thompson to develop the new plan. Musk and his brother Kimbal, also a board member, recused themselves from the process.
The 2018 package was valued at $56 billion and came under fire for lacking provisions that would bind Musk to the company long term — a gap that the new two-year service requirement appears to address. It was invalidated by a Delaware court after a shareholder lawsuit, which exposed Musk’s deep influence over the board and the flawed structure of the deal.
Following the court’s ruling, Tesla took the rare step of reincorporating in Texas, a state with less stringent corporate governance laws. The company also held a shareholder vote to reaffirm support for Musk’s 2018 package, but the court rejected that effort, calling it legally unprecedented.
While this new award avoids another shareholder vote for now, Tesla said it plans to present a broader CEO compensation strategy at its next annual meeting in November. Until then, the value and structure of Musk’s latest package remain tightly linked to ongoing legal proceedings — and to his continued presence at the helm of Tesla during one of the most competitive periods in the company’s history.
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