Tesla, Inc. (NASDAQ: TSLA) is trading at $309.80, up 2.37% as of Monday afternoon, after announcing a new $29.1 billion share-based award for CEO Elon Musk. This strategic move comes amid an ongoing legal dispute over Musk’s original $56 billion compensation package from 2018, which was invalidated by a Delaware court for being “unfair to shareholders.”
In a Monday SEC filing, Tesla emphasized that the new plan is intended to ensure Musk remains committed to Tesla during a time when top AI talent is aggressively pursued by rival tech giants. If the court later reinstates the 2018 deal, the new award would be forfeited to avoid any “double dip.”
Breaking News: Tesla granted about $29 billion in shares to Elon Musk, calling it a “good faith” award to help retain him after a judge struck down his previous pay package. https://t.co/wrrerm43Nv
— The New York Times (@nytimes) August 4, 2025
Musk’s original deal offered the option to buy 304 million shares at $23.34 each—contingent on Tesla hitting ambitious business milestones. Musk fulfilled those goals by December 2021, but has yet to be paid. The new award grants 96 million shares under the same price, exercisable only if Musk stays actively involved with Tesla until at least August 3, 2027.
The Tesla board, through directors Robyn Denholm and Kathleen Wilson-Thompson, stressed that Musk has not received meaningful pay since 2017 and is critical to Tesla’s success. They noted the company’s current “inflection point,” as it transitions from EV manufacturing to a focus on AI and robotics.
The legal battle over Musk’s original compensation plan raises a broader issue—can shareholders override judicial decisions? Chancellor Kathaleen McCormick invalidated the 2018 plan, citing Musk’s influence over Tesla’s board and a lack of transparency. Despite a second shareholder vote approving the plan in June 2024, the court’s stance has not shifted.
If the Delaware Supreme Court upholds McCormick’s ruling, Tesla may be forced to absorb a substantial accounting charge. In earlier filings, the company said replacing the original deal could exceed a $25 billion hit.
Dan Ives of Wedbush Securities called the new award a “huge step forward,” underscoring Musk’s value to Tesla amid fierce AI competition. With Big Tech players like Meta and Microsoft offering massive compensation to AI engineers, Tesla’s leadership believes retaining Musk is essential.
Despite the recent positive stock movement, Tesla’s year-to-date return is down 23.31%. The company posted Q2 revenue of $22.50 billion, missing analyst expectations. Tesla’s next earnings report has not yet been scheduled.
Yet over the past five years, TSLA shares have surged 212.42%, vastly outpacing the S&P 500’s 91.11%, reaffirming investor confidence in its long-term innovation strategy.
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