On Monday, Tesla awarded CEO Elon Musk a stock package worth approximately $29 billion, recognizing years of significant growth, even as the company faces recent struggles related to Musk’s political involvement, declining sales, and falling stock prices.
The company granted Musk 96 million restricted shares, noting that he hasn't received compensation in years due to a 2018 pay package being struck down by a Delaware court. That package was invalidated again eight months ago, though Tesla is appealing the decision.
Calling the new award a “first step” in good faith, Tesla said the move is aimed at retaining Musk and ensuring he stays focused on the company, especially as he also leads other ventures like SpaceX and xAI. Musk has argued that he needs more control over Tesla to prevent activist shareholders from forcing him out.
In a regulatory filing, Tesla defended the move, saying, “Rewarding Elon for what he has done and continues to do for Tesla is the right thing to do,” referencing the $735 billion increase in Tesla’s market value since 2018.
Despite this long-term growth, Tesla’s stock has dropped 25% this year, partly due to Musk’s alignment with Donald Trump and a growing backlash. The company is also under pressure from increasing competition, both from U.S. automakers and Chinese EV brands.
Tesla's latest financial report showed profits falling sharply from $1.39 billion to $409 million, with revenue also declining and the company missing even reduced Wall Street expectations.
Investors have become increasingly concerned about Musk’s focus, especially as he has been actively involved in political affairs in Washington, taking a visible role in Trump’s efforts to shrink the federal government.
The company stated in its filing that Musk will need to pay $23.34 per share for the restricted stock to vest, which matches the exercise price from the earlier 2018 package.
Last December, Delaware Judge Kathleen St. Jude McCormick reaffirmed a ruling canceling Musk’s 2018 compensation, stating it had been arranged through sham negotiations with non-independent board members. The decision stemmed from a lawsuit filed by a Tesla shareholder.
The original pay deal had a potential value of $56 billion, though the actual worth has changed over time with Tesla's fluctuating stock price. Musk appealed the ruling in March, and in April Tesla announced a special committee would reevaluate Musk’s compensation.
Musk remains one of the world’s wealthiest individuals.
Wedbush analyst Dan Ives said the new stock grant could ease investor concerns, writing that it likely secures Musk's leadership at Tesla through at least 2030 and removes uncertainty that has surrounded the company since the Delaware court battles began.
Under shareholder pressure, Tesla recently announced it would hold its annual meeting in November, in line with Texas law. A group of over 20 shareholders had demanded that the company publicly confirm the meeting after watching the stock's continued decline.
Tesla shares rose nearly 2% during midday trading on Monday.