Tesla has announced a new stock award for CEO Elon Musk worth $29 billion. The company refers to this as an "interim award," a first step demonstrating "good faith" after a Delaware court invalidated Musk's 2018 $50 billion compensation package.

Musk will receive these shares if he remains in a senior leadership role for another two years and if the court does not reinstate the previous award, which is currently under appeal. The new package includes options to purchase 96 million Tesla shares at $23.34 per share—the same exercise price as the previous package. With Tesla's current share price at $309, the package is valued at $29.6 billion.

Billionaire Elon Musk at the Oval Office in the White House on 15/1. *Photo: AFP*

Musk's previous compensation package was considered the largest in US corporate history. At Tesla, Musk doesn't receive a salary or direct bonuses. Under the 2018 agreement with shareholders, he was granted a compensation package consisting of options to purchase 304 million shares through 2028, contingent on Tesla achieving specific performance and capitalization goals. These options were divided into 12 tranches.

Tesla shareholders approved the package twice, in 2018 and June 2024. However, a Delaware court invalidated it twice last year. The judges deemed the payout "fantastical," unfair to shareholders, and creating uncertainty about Musk's future at the electric vehicle company. They asserted that Musk had controlled the negotiation process.

Despite this, in documents filed with the Delaware court, Tesla maintained that Musk had contributed significantly to the company's growth and deserved the compensation. On 4/8, Tesla also announced it would hold a shareholder vote on a long-term CEO compensation plan at its annual meeting on 6/11.

The new compensation package is seen as a move to retain Musk as Tesla faces a turning point. The company's core car business is facing challenges. Tesla is also working to advance its self-driving technology and humanoid robot projects. Musk is the face of the company and the chief architect of the self-driving car project.

This award also quashes speculation that Tesla's board of directors had lost patience with Musk after several tumultuous months, including his increased involvement in politics. Granting Musk further control indicates the board still considers him the best person to address Tesla's growing challenges in the coming years.

Tesla's sales have recently declined due to aging models, increased competition, and brand image impacted by Musk's political views. In Europe, Tesla sales declined for the first five months of this year. Earlier this month, Tesla announced it had stopped taking orders for its new Model X and Model S, selling only remaining inventory.

Data released by S&P Global Mobility on 4/8 shows that customer loyalty to the Tesla brand has dropped significantly since Musk publicly supported former US President Donald Trump last summer.

Musk's political involvement and simultaneous management of multiple companies, including the startup xAI, have raised concerns about his focus on Tesla, his primary source of wealth. Musk had previously warned he might leave if not given more control over the company.

Ha Thu (*via Reuters, CNN*)