Tesla has given its CEO Elon Musk $29 billion (£21.7 billion) in shares in an effort to keep him at the company. The move comes after a US court ruled that his 2018 pay package of more than $50 billion was “unfair to shareholders”. Musk has been appealing the Delaware court’s judgement in 2024, and Tesla told shareholders on Monday it was “confident” that the $29 billion in shares “will incentivise Elon to remain at Tesla,” especially as “the war for AI talent intensifies”. The prize should increase Musk’s voting power on the electric car company’s board.
“It is critical to retain and motivate our exceptional talent, beginning with Elon,” Tesla’s board stated on X, Musk’s platform, adding that “no one matches Elon’s remarkable combination of leadership experience and technical expertise.” According to the company, the billionaire has a “proven track record” of creating “revolutionary and profitable businesses”. Tesla claimed that if the Delaware court reinstated Musk’s 2018 pay contract, he would forfeit or return the most recent share award to avoid a “double dip”. The automaker’s board expressed anticipation that its CEO would be awarded the $56 billion agreement, which would be the largest compensation package in corporate American history.
The agreement was constructed so that if Mr Musk did not meet specific goals, such as Tesla’s market value, sales, and underlying profit, he would not be compensated at all. Nonetheless, he met the objectives that had been set. Musk’s petition to get his pay packet reinstated claims that the lower court committed legal errors in rescinding his pay package. He has previously stated that firm shareholders should decide pay. Wedbush Securities’ Dan Ives told the BBC that Tesla’s decision was “what they needed to do to keep him [Musk] at the firm”. “The biggest asset for Tesla is Musk, the board need to do this, and I believe it’s a huge step forward.”
He went on to say that the company could not afford to have Musk being “semi-committed” during the “AI arms race”. Tech companies seeking to establish themselves in the AI field have been giving large sums to rival employees in an effort to entice them to join them and further their careers. Facebook founder Mark Zuckerberg is believed to have recently attempted to entice senior developers from ChatGPT maker OpenAI with million-dollar pay packages. Meanwhile, Microsoft’s AI division, led by Mustafa Suleyman, a former Google DeepMind co-founder, has lately hired numerous Google employees.
Tesla said it was at a “inflection point” and needed Musk’s expertise as it transitioned from an electric vehicle manufacturer to an AI and robotics company. The business claimed that the share reward would be appealing to Musk “with other “demands on his time and attention.” Musk’s other jobs include executive positions at xAI, Neuralink, and The Boring Company, which builds tunnels and other infrastructure in the United States. He just announced his departure from politics, following a period as US President Donald Trump’s adviser.
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