Tesla Stock Rises as Board Approves New Compensation Package for Elon Musk

Tesla stock (NYSE: TSLA) is trading higher today after the company’s board approved a new compensation package for its CEO, Elon Musk, granting him a share award valued at approximately $29 billion. This decision follows a protracted legal battle and a prior Delaware court ruling that voided Musk’s 2018 compensation plan, which was then worth over $50 billion.

The new compensation plan, which is yet to be ratified by Tesla shareholders, grants Musk 96 million Tesla shares at $23.34 per share, contingent upon his remaining in continuous service until Aug. 3, 2027, either in the capacity as a CEO or as an executive officer of Tesla, looking after product development or operations.

In its filing, Tesla said, “Elon has not received meaningful compensation for eight years since the 2012 CEO Performance Award was last earned in 2017.” It added, “To recognize what Elon has accomplished and the extraordinary value he delivered to Tesla and our shareholders, we believe we must take action to honor the bargain that was struck in 2018. After all, “a deal is a deal.”

Tesla Grants New Compensation to CEO Elon Musk

Notably, last year, a Delaware court invalidated the 2018 pay package, ruling that the approval process was flawed and unfairly benefited Musk at the expense of shareholders. Musk has been appealing that decision, and the new compensation plan includes a provision that if the original 2018 award is reinstated by the courts, the new interim grant will be forfeited or offset to prevent a “double dip.”

The new compensation package, while still substantial, is intended to address the concerns raised in the Delaware court’s ruling and align Musk’s financial interests with the company’s long-term value creation. The board’s special committee, which was formed to re-evaluate Musk’s compensation, stated that they are confident the award will “incentivize Elon to remain at Tesla” and focus on the company’s future.

Notably, Musk does not receive any fixed pay, incentive, or bonus from Tesla, and all his compensation is tied to stock options, which are contingent upon the company hitting several milestones like profitability and market cap.

Tesla Board Says Retaining Musk Is Important

In its regulatory filing, Tesla said that retaining Musk is “more important than ever before” since the company “is at a critical inflection point that has the potential to create continued extraordinary value” for shareholders.”

The filing added, “Through Elon’s unique vision and leadership, Tesla is transitioning from its role as a leader in the electric vehicle and renewable energy industries to grow towards becoming a leader in AI, robotics, and related services.”

It went on to say, “To succeed, it requires a leader who combines strategic foresight, adaptability, and relentless execution to outperform competition and inspire the team. Elon has demonstrated these unmatched leadership abilities time and time again with his unparalleled track record of delivering shareholder value since he joined as a founding figure and spearheaded the transformation of our extraordinary company.

Musk Is Seeking Higher Voting Rights At Tesla

Notably, in a post on X in January 2024, Musk said that “I am uncomfortable growing Tesla to be a leader in AI & robotics without having ~25% voting control. Enough to be influential, but not so much that I can’t be overturned.”

Currently, Musk owns around a 13% stake in Tesla, and his ownership fell after he sold shares to fund his Twitter acquisition. His public call for higher voting rights in Tesla was seen as a ploy to pressure Tesla’s board for a new compensation structure.

More recently, during Tesla’s Q2 2025 earnings call last month, Musk said that he hoped that the issue of him having higher voting rights would be taken up at the upcoming shareholder meeting.

“I don’t want to find that I’ve got like so little control that I can easily be ousted by activist shareholders after having this army of humanoid robots. I think as I’ve mentioned before, I think my control over Tesla should be enough to ensure that it goes in a good direction, but not so much control that I can’t be thrown out if I go crazy,” said Musk during the earnings call.

TSLA’s Sales Have Sagged

Meanwhile, even as Musk has been trying to steer Tesla from an EV company to a tech giant focusing on artificial intelligence, robotics, and humanoids, the company’s core automotive business has been facing several challenges with sales falling for the first time last year. The slowdown has only deepened in 2025, and Tesla’s deliveries fell in double digits in the first half of the year.

Musk has warned of a few “rough quarters” ahead as the One Big Beautiful Bill Act does away with the EV tax credit, which could hurt EV sales.

Elon Musk Has Formed a New Political Party

Musk has formed a new political party after his bitter feud with President Donald Trump. Notably, Musk headed Trump’s Department of Government Efficiency (DOGE) until May and was tasked with eliminating “wasteful” government expenses. However, the bonhomie between Musk and Trump ended shortly after the world’s richest person left the White House.

The feud started with Musk criticizing Trump’s tax and spending bill, but soon got ugly. Musk has said that he is against the One Big Beautiful Bill Act as it would add to the national debt and undo the work he did at DOGE, and termed it “DEBT Slavery Bill.”

Musk’s expanding his political activity with the new party is also making markets apprehensive about the billionaire’s ability to devote adequate time to Tesla. Such concerns have been around for quite some time, as apart from Tesla, Musk also heads several other companies like SpaceX and Neuralink. Of late, he has added X and his AI startup xAI to the ever-growing list of companies that he owns.

Notably, one of the reasons critics slam Musk’s multi-billion-dollar compensation package is that, despite the mammoth package, which was the largest in US corporate history, the Tesla board failed to get a commitment from Musk to spend more time at the company.