Tesla approves massive $29 billion share award for Elon Musk

Tesla’s board has approved a substantial $29 billion (£21.8 billion) share award to CEO Elon Musk, a move designed to keep the controversial executive focused on the EV business during a period of flagging sales and intense competition.

Comprising 96 million new shares, this new package aims not only to retain Musk’s leadership but also to significantly bolster his voting power from its current 13%.

The company explicitly stated that the award hopes to “incentivize Elon to remain at Tesla,” acknowledging his “extensive and wide-ranging” business ventures and outside interests.

This decision comes as Tesla navigates a challenging landscape, marked by a sales backlash attributed in part to Musk’s past association with Donald Trump. The headwinds have been made stronger as the Trump administration has cut support for EVs, with Musk admitting last month that it could lead to a “few rough quarters” for the company.

The share award is seen as crucial for maintaining Musk’s focus on Tesla, as the company concentrates on rolling out a new, cheaper model to boost sales and counter fierce competition, especially from Chinese manufacturers. Tesla is also in the midst of trials for its self-driving software, with anticipated revenues from its widespread rollout not expected until late next year.

This latest compensation package follows a protracted legal battle over an earlier 2018 award, worth over $50 billion, which was voided by a Delaware judge. While an appeal process for that previous package is ongoing, the new grant is structured to be forfeited or offset if the 2018 award is ultimately reinstated, preventing a “double dip.” The new compensation package is now subject to shareholder approval.