Tesla’s board of directors has approved a record-breaking new pay package for CEO Elon Musk, worth $29 billion. The deal is a significant boost to Musk, who had been without a major compensation package since 2018 due to ongoing litigation in Delaware courts. In that time, Tesla moved its incorporation from Delaware to Texas, where the board has adopted stricter rules for challenging CEO pay.
The new package, which includes 96 million restricted shares, gives Musk a significant stake in the company and boosts his ownership from around 13% to 15%. The arrangement also creates a “floor-and-ceiling” structure tied to ongoing litigation in Delaware, allowing Tesla to continue its efforts to block challenges to Musk’s pay.
Experts describe the deal as a form of “fog-the-mirror grants,” which do not come with performance targets. However, some analysts say that the package may be more complex than initially thought, particularly given the unique circumstances surrounding Tesla’s move from Delaware to Texas.
Tesla’s decision to adopt stricter rules for shareholder challenges has been seen as a response to Musk’s increasingly politicized behavior and declining stock performance. The company’s market value has fallen by over 18% year-to-date, and some shareholders have expressed concerns that Musk is more focused on his personal agenda than on driving long-term growth.
As investors react to the news, some pension fund leaders have criticized the package as “egregious” and say it enriches Musk at investors’ expense. The deal has also raised questions about the relative merits of Delaware versus Texas as corporate homes, with some experts predicting that Tesla’s move may influence how other companies weigh their options.
Despite the criticism, Tesla’s board remains committed to retaining its top talent, citing the intense competition for AI and robotics talent in the industry. With Musk’s new package, the company aims to keep him focused on driving innovation and growth, while also addressing concerns about corporate governance and long-term planning.
Source: https://fortune.com/2025/08/04/elon-musk-pay-package-tesla-compensation