Elon Musk awarded $29bn in Tesla shares to steer shift to AI

Tesla has awarded CEO Elon Musk a $29 billion stock grant to keep him at the helm as the company pivots from electric vehicles to robotaxis and humanoid robots.

The award, which includes 96 million new Tesla shares, is meant to secure Musk’s continued leadership during a turbulent time marked by slowing sales, growing competition, and concerns over his political involvement and other ventures like xAI.

The company called the grant an “interim award,” describing it as a "good faith" installment toward a $50+ billion compensation plan from 2018, which a Delaware court invalidated last year. That ruling is still under appeal.

To receive the new shares, Musk must:

• Remain in a top executive role for at least two more years
• Continue to hold the shares for five years
• Pay an exercise price of $23.34 per share, identical to the 2018 plan

Tesla shareholders will vote on a longer-term compensation plan at the annual meeting on November 6.

Why Now?
The new award signals the board’s belief that Musk remains critical to Tesla’s future—particularly as it moves away from traditional auto manufacturing and focuses more on AI-driven technologies like cybercabs and robots.

The decision also appears aimed at quieting rumors that the board had lost patience with Musk due to his political activities. Instead, it confirms the board’s confidence that he is best positioned to steer Tesla through this major transition.

Political Fallout and Brand Trouble
Musk, who also runs SpaceX and owns X (formerly Twitter), has drawn criticism for his right-leaning political views, including an endorsement of Donald Trump, which some say has damaged Tesla’s brand.

According to S&P Global Mobility, Tesla’s brand loyalty has declined sharply since Musk's Trump endorsement in mid-2024.

Increased Stake, No Double-Dip
The new award will boost Musk’s stake in Tesla from 12.7% to over 15%, based on LSEG data. Before this grant, Musk had no active compensation plan and had not received meaningful pay since 2017.

To avoid a “double dip,” the new shares will be forfeited or adjusted if the Delaware court reinstates the 2018 award.

Tesla said it does not yet expect to record a compensation expense for this package, but will revisit the accounting if performance conditions are later met.

Analysts estimate that a plan similar to the 2018 package would carry an accounting charge of over $25 billion. Although this new plan is smaller in scope, the near-doubling of Tesla’s share price over the past year increases its potential cost.

“The compensation expense to Tesla here is going to be ferocious,” said Lawrence Fossi, a Tesla critic and newsletter publisher.

Still, Tesla shares rose nearly 2% after the announcement. Despite being down 25% year-to-date, investors appeared encouraged by the move.

“In most cases, a multi-billion-dollar pay package would raise eyebrows,” said Shawn Campbell of Camelthorn Investments. “But investors have clearly benefited from Musk’s leadership. This ties him to Tesla for the next two years.”

Legal Battle Over 2018 Award Continues
Musk is still appealing the Delaware court’s voiding of his 2018 compensation plan, which was the largest in U.S. corporate history. The court found the approval process flawed and unfair to shareholders, despite the fact that investors voted twice in favor of the deal.

Musk has argued that the plan drove Tesla’s extraordinary growth, with shares rising nearly 2,000% over the past decade — compared to a 200% gain in the S&P 500.

Still, critics see the new plan as a way to sidestep the court’s ruling.

“This is essentially a repackaged version of the plan that was ruled improper,” said Charles Elson, founding director of the Weinberg Center for Corporate Governance. 

“He doesn’t need more incentives. If he quits, he forfeits a huge part of his net worth.”