Tesla will give Musk a $30 billion stock bonus, which should keep him at the company

Elon Musk will receive a $30 billion equity stake from Tesla, which should keep him as CEO until at least 2027. Despite the fact that earlier the court blocked the payment of Musk's bonus, the board of directors recognized the entrepreneur's contribution as "exceptional" and considered it necessary to keep him at the helm. Investors supported the decision: shares are growing, even despite the news of falling sales in China.

Tesla's board of directors approved the granting of 96 million shares worth about $30 billion to billionaire CEO Ilon Musk as part of a new compensation agreement. Tesla indicated that the decision was recommended by a special committee that included only Chairman Robin Denholm and its independent member Kathleen Wilson-Thompson. 

Musk will only have to pay the company $23.34 for each restricted share that will vest. Tesla explained that this amount corresponds to the exercise price of the options set in the 2018 compensation package. Right now, Tesla's stock is worth more than $300 on the stock exchange.

The shares will vest in Musk on Aug. 3, 2027, provided he remains CEO until then, Tesla said in a filing. 

"We are confident that this reward will encourage Ilon to remain at Tesla and focus his unrivaled leadership skills on continuing to create shareholder value for Tesla's investors and attracting and retaining talented employees. More specifically, losing Ilon would mean not only the loss of his talents, but also the loss of a leader who attracts and retains talented employees at Tesla," the electric car maker said in a letter to shareholders. 

"I think my control of Tesla should be enough to ensure that the company is moving in the right direction, but not so strong that I can't be removed if I go crazy," Musk told investors during a conference call on Monday (quote via FT).

The company's shares were up 3% in early trading on August 4 after four consecutive days of declines last week. Not surprisingly, information about the new bonus supported the quotes - investors hope that the new compensation will keep Musk at the helm of Tesla at a time when he is combining roles in several companies and making plans to create a political party, writes Barron's. 

According to the stock's vesting schedule, Musk is likely to remain CEO for at least the next five years, according to Wedbush analyst Dan Ives, whose estimate is published by MarketWatch. 

The approval of the stake for Musk also appears to be helping investors ignore the news of Tesla's falling sales in China. On Monday, the company reported that shipments of cars made in China fell 8.4 percent in July.

Since the beginning of the year, Tesla's securities have fallen in price by 25% amid concerns about declining supplies and Musk's political activity. By comparison, the S&P 500 index has grown by 6.1% since the beginning of the year.

Tesla and Musk have been embroiled in a legal battle over his pay for more than six years. Back in 2018, Tesla approved an unusual arrangement - Musk, topping Forbes' list of the world's richest people, gave up his salary at the company in exchange for 12 stock option packages if certain goals were met. Musk attributed the need for the options to the fact that he needed control of Tesla in order to expand its presence in the field of artificial intelligence. However, the agreement caused discontent among shareholders, with one of them challenging it in court. In January 2024, the court annulled the agreement, finding that the board was influenced by Musk in making the decision. The case is now before the Delaware Supreme Court. If it grants the appeal and the canceled compensation package is reinstated, Musk's stake in Tesla will rise from just under 13% to more than 20%, the FT writes.

Ilon Musk has repeatedly threatened to leave the company if he doesn't get more control over it. After Tesla reported its "worst quarter in 10 years" in July, he repeated that threat again, warning that he "could very well be forced out by activist shareholders."

"I believe my control over Tesla should be enough to ensure the company moves in the right direction, but not so much that I can't be removed if I go crazy," Musk said.

Musk said the pressure on the company is intensified by the loss of subsidies for the purchase of electric cars in the U.S., as well as slow progress in launching unmanned technology. Tesla shares have already lost more than 20% since the start of 2025, despite a short-term recovery in the spring.

U.S. consumer loyalty to Tesla has fallen "unprecedentedly" since Musk backed Donald Trump's presidential nomination and then engaged in budget cuts in his administration, a S&P Global Mobility poll provided to Reuters showed. While 73% of households already owning a Tesla were willing to buy another one last June, that figure had collapsed to 49.9% by March, when Musk laid off thousands of government workers.  

This article was AI-translated and verified by a human editor