Tesla Inc. has approved an interim stock award valued at about $30 billion for Chief Executive Officer Elon Musk, in a move aimed at securing his continued leadership as the electric vehicle maker confronts declining sales and a volatile share price.
In a regulatory filing released Monday, the company disclosed that Musk would receive 96 million restricted shares, subject to a two-year vesting period, provided he remains in a senior leadership role.
The shares carry an exercise price of $23.34 each, matching the rate set in the automaker’s 2018 compensation plan.
The award, valued at approximately $30 billion at Tesla’s current stock price of $309.10 per share, requires Musk to pay $23.34 per share — a total of $2.24 billion — to exercise the grant.
The board emphasized that the package serves as a “good faith” arrangement while legal challenges surrounding Musk’s 2018 $56 billion compensation plan remain unresolved in Delaware courts.
Market Response and Analyst Views
Shares of Tesla rose 2.1% in early New York trading following the announcement, although the stock remains down 25% this year, compared to a 6% gain in the S&P 500.
Wedbush analyst Dan Ives described the move as removing a significant overhang on the company’s stock. “Musk remains Tesla’s big asset and this comp issue has been a constant concern of shareholders,” Ives said in a note to clients.
The board stressed the importance of retaining Musk amid intensifying competition in the electric vehicle sector and what it called an “inflection point” for the company, particularly as it pivots toward autonomous driving and artificial intelligence.
Legal Context
Musk’s 2018 “moonshot” compensation plan, initially worth $2.6 billion and later valued at more than $50 billion, was voided by a Delaware court in early 2024 after a shareholder lawsuit. Tesla has appealed the decision, but a resolution may take months.
The new interim grant will be forfeited if the original 2018 package is reinstated in full, preventing what the company called a “double dip.”
Challenges Facing Tesla
The decision to back Musk comes as Tesla struggles with slowing demand for its electric vehicles and increased competition from Chinese and global rivals. The company reported a 16% decline in second-quarter revenue in July, with Musk warning that Tesla may face “a few rough quarters” ahead.
Despite these challenges, Tesla has made progress in new initiatives. The company launched a driverless taxi service in Austin on June 22, which Musk views as a cornerstone of Tesla’s future growth strategy.
Outlook
Tesla’s board said the new award ensures Musk remains at the helm during a critical phase. “While we recognize Elon’s wide-ranging commitments, including his roles at SpaceX, Neuralink, xAI, X Corp., and the Boring Company, losing Elon would mean losing a leader who is also a magnet for attracting and retaining talent,” the board noted.
Tesla shareholders will vote on a longer-term CEO compensation plan at the company’s annual general meeting scheduled for November 6.