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Tesla’s board has approved the award of 96mn shares worth about $30bn to Elon Musk as part of a new pay deal after the billionaire chief executive threatened to leave the electric-vehicle maker if he was not given more stock.
In a filing on Monday, Tesla said the decision was recommended by a special committee formed by the board comprising just the chair, Robyn Denholm, and her fellow director Kathleen Wilson-Thompson. It was then approved by the board.
“Retaining Elon is more important than ever before,” the company said in a letter to shareholders on Monday. “We are confident that this award will incentivise Elon to remain at Tesla.”
Tesla shares were up about 2 per cent in pre-market trading at $309.
Tesla and Musk have been embroiled in a legal battle in Delaware for seven years over a previous $56bn award, the largest in US history. The package was struck down in January 2024 by Delaware judge Kathaleen McCormick, who ruled that it was excessive and said that board members were in thrall to Musk.
Musk has since repeatedly threatened to leave the company unless he is given more control over it. Following lacklustre results last month, Musk renewed that threat, warning that he could “easily be ousted by activist shareholders”.
“I think my control over Tesla should be enough to ensure that it goes in a good direction, but not so much control that I can’t be thrown out if I go crazy,” Musk told investors in a briefing call.
The addition of 96mn shares will raise Musk’s holding from just under 13 per cent to about 16 per cent.
To receive the new award, Musk must pay the company $23.34 per share of restricted stock as it vests, which the company said was equal to the exercise price per share of the 2018 pay award.
If reinstated on appeal by Delaware’s Supreme Court, the 2018 package would increase Musk’s ownership of Tesla to more than 20 per cent. Musk would then forgo the new award.
Tesla’s board is battling to resolve uncertainty over Musk’s future amid declining sales and pressures created by his fractious relationship with US President Donald Trump, who has implemented anti-EV policies since returning to the White House.
Musk has promised to refocus his attention on Tesla after the carmaker’s sales collapsed in Europe and other key markets during his time working in the Trump administration, which ended in a spectacular falling out between the two men earlier this year.
In their letter to shareholders on Monday, Denholm and Wilson-Thompson stressed that the award was “a critical first step” to keep Musk focused on Tesla and indicated that they were working on other steps to ensure he remained committed to the company.
They added that retaining Musk was critical to attracting talent as Tesla shifts its pivot to artificial intelligence and autonomous robotaxis, which they hope will generate the group’s main source of revenue in the future.
Wedbush analyst Daniel Ives said he believed the award would keep Musk as Tesla chief executive until at least 2030 and it removed a downward pressure on the stock.
“Musk remains Tesla’s big asset and this comp issue has been a constant concern for shareholders once the Delaware soap opera began,” Ives added.