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3 months ago
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The electric car maker’s directors has granted 96 million new shares to its billionaire chief executive
Tesla’s directors have awarded chief executive Elon Musk a compensation deal of 96 million shares worth about $30bn (£22.5bn) as part of a new pay deal after the billionaire threatened to leave the company.
Tesla said the move was designed to keep the entrepreneur at the electric car maker as he fights a court ruling that dismissed his original pay deal, for being unfair to shareholders.
In 2024, a US court in Delaware twice rejected Musk’s 2018 compensation package, valued at more than $50bn (£37.6bn), citing that the Tesla board’s approval process was flawed and inequitable to shareholders.
In March this year, Musk began an appeal against the judge’s order, claiming she made multiple legal errors. If his appeal succeeds and the pay and rewards package is reinstated, it would increase his ownership of Tesla from just under 13 per cent to more than 20 per cent.
After the decision, the company said its board had formed a special committee to consider some compensation matters involving Musk, without revealing details. In a letter to shareholders it added: “Retaining Elon is more important than ever before.
“While we recognize Elon’s business ventures, interests and other potential demands on his time and attention are extensive and wide-ranging… we are confident that this award will incentivize Elon to remain at Tesla.”
The letter continued: “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. 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 in the filing.”
Tesla said Musk had “not received meaningful compensation for eight years” and its “legal efforts continue” to reinstate the 2018 pay package, adding that there was a “clear timeline for resolution.”
The award is designed to boost Musk’s voting power, something he and shareholders had consistently said was key to keeping him focused on Tesla’s mission, the firm added.
Analysts say Tesla is at a key turning point as Musk, its largest shareholder, shifts focus from a long-promised affordable EV car selection to robotaxis and humanoid robots, positioning the company more as an AI and robotics firm than a car maker.
He becomes entitled to the shares if he remains with Tesla for two years after the deal is approved by shareholders. He must pay the company $23.34 (£17.60) a share, which it said was equal to the exercise price per share in its 2018 pay package.
The Tesla board’s move comes after new data revealed its customer loyalty had plunged since Musk endorsed Donald Trump for president last year.
The data shows that, in the US, Tesla had more repeat customers than any other rival major car maker – loyalty that peaked in June 2024, when 73 per cent of Tesla-owning households in the market for a new car bought another one.
Research firm S&P Global Mobility analysed vehicle registration data in all 50 states.
However, that industry-leading brand loyalty started to nosedive in July, when Musk endorsed Trump following an assassination attempt on the Republican nominee in Pennsylvania.
The loyalty rate bottomed out at 49.9 per cent last March, just below the industry average, after the tech billionaire launched Trump’s budget-slashing Department of Government Efficiency in January, and started firing thousands of staff.
The rate went up to 57.4 per cent in May, the most recent data available, putting it back above the industry average and about the same as Toyota but behind Chevrolet and Ford.
