Tesla granted shares to Elon Musk worth nearly $30 billion, the company said on Monday, describing it as a “good faith” award to help retain the car maker’s chief executive after his previous multibillion-dollar pay package was struck down by a judge.
The company approved a grant of 96 million shares for Mr. Musk, which he could tap after two years of service in a “senior leadership role” at Tesla. The mercurial billionaire, whose business empire includes rockets, artificial intelligence, brain implants and more, hinted last month that he wanted more shares in Tesla, on top of his 13 percent stake, to prevent his ouster by “activist” shareholders. It was a “major concern,” he said on an earnings call with analysts.
With the new shares, Mr. Musk would own nearly 16 percent of Tesla, a stake that would be worth over $150 billion at the company’s stock price on Monday.
The package amounts to an extraordinary pay raise for Mr. Musk as Tesla sales and profit are falling, and the company is losing market share, in part because of his behavior. His involvement in right-wing politics has alienated many liberal car buyers who are more likely than conservatives to buy electric vehicles. Mr. Musk is already the world’s richest person, worth about $350 billion, according to Bloomberg.
The action by Tesla’s board of directors is likely to fuel criticism that the members, who include several close friends and his brother, are failing to act as a check on Mr. Musk. In a regulatory filing, the board did not impose any conditions besides the one about staying in a senior role. Typically, executive pay is tied to performance goals. The new award will be worth $27 billion to Mr. Musk after taking into account the money he will have to spend to acquire the shares.
“None of this is normal,” said Brian JM Quinn, a professor at Boston College Law School. “Like in all things Musk, there is nothing like this.”
Tesla also appears to be taking advantage of a decision last year to move its corporate domicile to Texas from Delaware, where a judge struck down his previous pay package. The company has appealed that decision and said Mr. Musk would not “double dip” and receive the second pay package if a higher court reinstates the original compensation plan.
The new pay package is “basically immune from suits” in Texas, Professor Quinn said. To sue in the state, shareholders must own at least 3 percent of the company, a very high bar. “That’s one of the reasons he moved to Texas,” Professor Quinn said.
In a document filed with the Securities and Exchange Commission, the board endorsed Mr. Musk’s decision to reorient the company toward self-driving “robotaxis” and humanoid robots developed with artificial intelligence. Car sales have fallen as the company has focused its resources on those technologies, which do not yet generate significant revenue.
“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 toward becoming a leader in A.I., robotics and related services,” board members Robyn Denholm and Kathleen Wilson-Thompson said in a letter to shareholders Monday. They were the only members of a special committee that formulated the package.
Many shareholders buy into Mr. Musk’s strategy and will most likely applaud anything that keeps him at Tesla. “This was a strategic move by the board to solidify Musk as C.E.O. of Tesla over the coming years,” Daniel Ives, an analyst at Wedbush, said in a note on Monday. Mr. Ives, who is among Mr. Musk’s biggest supporters on Wall Street, called him Tesla’s “top asset” and said it was a “must” to keep him.
“We know that one of your top concerns is keeping Elon’s energies focused on Tesla,” the letter to shareholders said, adding that the stock award was “a critical first step toward achieving that goal.”
The board will ask shareholders to vote on a longer-term compensation plan at Tesla’s annual meeting in November, the letter said, suggesting that Mr. Musk’s pay would increase further.
In addition to his businesses, Mr. Musk has plunged into politics, steering President Trump’s cost-cutting initiative before they had a falling out, after which the tech billionaire pledged to start a new political party.
Tesla’s stock lost more than half its value between December and April, but has recovered and is now down about 20 percent for the year. Tesla remains the most valuable car company by far, with a market value of nearly $1 trillion.
Mr. Musk’s previous pay package, awarded in 2018, was struck down last year by Chancellor Kathaleen St. J. McCormick of the Delaware Court of Chancery, ruling that shareholders had not been properly informed of its details and that members of Tesla’s board were not sufficiently independent.
Tesla has appealed the decision, with its lawyers arguing that a second shareholder vote in favor of the package after the judge struck it down should have cleared the way for reinstating it. The shares in that package are worth roughly $85 billion at Tesla’s current stock price.
Ms. Denholm and Ms. Wilson-Thompson, who formed the special committee that approved the latest pay package, were among the only board members who did not have personal ties to Mr. Musk before joining the board. Both have been paid handsomely as board members.
Ms. Denholm, previously an executive for an Australian telecommunications company, has earned a profit of more than $500 million from stock options, according to regulatory filings.
Ms. Wilson-Thompson, who joined the board in 2018, was previously the global chief human resources officer for Walgreens Boots Alliance. She has sold Tesla shares worth more than $100 million since November, according to regulatory filings.
Other members of the board include Kimbal Musk, Elon Musk’s brother, and James Murdoch, with whom Mr. Musk has vacationed. Judge McCormick cited the board’s lack of independence when she ruled the 2018 pay package was improper.
Brad Lander, the New York City comptroller who oversees pension funds that own Tesla shares, described the new compensation plan as “obscene” while noting that Mr. Musk has been “largely absent.”
“Tesla’s captive board is once again enriching Elon Musk at investors’ expense,” Mr. Lander said in an email.
Mr. Musk has said that he needed more shares to have sufficient control over Tesla. “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,” he said on a conference call with investors and analysts last month.
It is very unusual for a board to award such a substantial pay package to an executive when sales and profit are in decline. Tesla has not reported an increase in quarterly earnings since the third quarter of 2024. Sales also declined this spring.
The compensation reflects faith that Mr. Musk can succeed in artificial intelligence as he has in electric cars and rockets. Tesla pioneered the electric car market, while SpaceX rockets have become the main vehicles for sending astronauts and satellites into space.
Mr. Musk has said that autonomous driving technology and humanoid robots would make Tesla the most valuable company in the world.
But the self-driving taxi market is already crowded, and Tesla is far behind its competitor Waymo, a unit of the same company that owns Google. Tesla began limited testing of self-driving taxis in Austin, Texas, in June. So far the service operates in a small area and is open to only a small group of carefully chosen customers. A Tesla employee rides in the front passenger seat to intervene if there are any problems. Waymo offers rides to paying customers in five urban areas without technicians in its vehicles.
Tesla’s reputation and its autonomous driving ambitions suffered a blow last week when a Florida jury found that flaws in the company’s self-driving software were partly to blame for a crash in 2019 that killed a 22-year-old woman and severely injured her boyfriend.
Jason Karaian and Peter Eavis contributed reporting.
Jack Ewing covers the auto industry for The Times, with an emphasis on electric vehicles.
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