Tesla just made a bold move — again. The electric car and energy company has asked its shareholders to approve a massive $29 billion compensation package for CEO Elon Musk. But this isn’t just about a big payday. It’s a high-stakes, high-drama chapter in Tesla’s fight to keep Musk in the driver’s seat during what it calls an “AI talent war.”
Let’s break down the what’s, why’s, and what-now’s.
The Offer on the Table
Tesla’s board is proposing a new award that would give Musk 96 million shares, currently worth around $29 billion. But there are strings attached:
- Musk would need to stay in a senior leadership role at Tesla for two years.
- He’d have to hold onto those shares for five years.
- He’d pay $23.34 per share, which makes his net gain about $26.7 billion at today’s prices.
- And it only happens if the Delaware Supreme Court lets it happen.
Which brings us to the legal twist.
A Flashback to 2018 — and the Court Fight That Followed
This isn’t Musk’s first controversial compensation deal with Tesla. Back in 2018, he had a $56 billion performance-based package that didn’t require him to stay at the company long term. That deal was struck down in January 2024 by Delaware Judge Kathaleen McCormick, who said the negotiation process was “deeply flawed” and heavily influenced by Musk himself.
She also flagged the fact that Musk had strong personal ties to Tesla board members and was directly involved in crafting the arrangement. Tesla tried to push back with a shareholder vote to re-approve the original package, but McCormick held her ground. In December 2024, she confirmed her decision: the deal was out, no matter how many fans or investors wanted it reinstated.
Now Tesla’s appealing to the state’s Supreme Court. And they’ve made clear: Musk can’t receive both packages. If the appeal succeeds, the new one disappears.
Why Tesla Is Making This Move Now
According to Tesla, we’re in the middle of a “critical inflection point” for the company — and the entire AI industry. Musk has made it clear he wants more control over Tesla if he’s going to stay committed to its AI and robotics work. Earlier this year, he even hinted he might stop working on those parts of the business unless he gets at least 25% of the company’s voting power.
Enter the new package. Unlike the 2018 deal, this one ties Musk’s payout to him actually sticking around. It’s an answer to both internal leadership concerns and external pressures.
And there’s real heat in the AI talent market. The biggest tech players are throwing around multi-million dollar offers to lock down AI researchers. Musk is also running his own AI startup, xAI, which now owns his social platform, X. So there’s more than a little competition for his time and energy.
The Board’s Process This Time Around
To avoid the same legal pitfalls as 2018, the Tesla board set up a special committee made up of Chairwoman Robyn Denholm and Director Kathleen Wilson-Thompson. They were tasked with crafting the new compensation offer — without Musk or his brother Kimbal (a board member) in the room.
That’s an important change. It’s Tesla’s way of showing the package wasn’t influenced by Musk’s direct involvement, which was a big red flag in the previous case.
What Happens Next?
This $29 billion decision isn’t final yet. It’ll be brought to a shareholder vote during Tesla’s annual meeting, scheduled for November. But even if shareholders approve it, the Delaware Supreme Court still has the final say. If they uphold the January ruling against Musk’s 2018 deal, the new package may move forward. If not, it vanishes.
So, for now, Tesla’s future with Musk—and Musk’s future with Tesla—is still up in the air. What’s clear is that behind the numbers and legal strategy lies a real question about leadership, value, and who gets to steer the company at a time when AI is pulling everyone in new directions.
Stay tuned. November could be a defining month for Tesla’s next chapter.
Keywords: Elon Musk, Tesla compensation, Tesla shareholders, AI talent war, Tesla leadership, Delaware Supreme Court, xAI, Tesla board decision, Robyn Denholm, Musk pay deal
