Tesla has approved a new compensation package for CEO Elon Musk, granting him 96 million restricted stock units (RSUs) valued at around $29 billion based on the company’s current stock price. The announcement was made in a regulatory filing on August 4. It comes after a Delaware court earlier this year cancelled Musk’s 2018 pay package, which had once been valued at over $55 billion. The judge ruled that the company’s board failed to follow proper procedures and did not act independently when approving that compensation plan.
And now, under the new agreement, Musk must remain in a leadership position at Tesla until at least August 3, 2027, for the shares to vest. He can serve either as CEO or in a senior role overseeing critical areas like product development or operations. Even after vesting, Musk cannot immediately cash out. The shares will be subject to a five-year lock-up, meaning he cannot sell them before 2032, except under certain conditions, like paying taxes or covering the purchase price. Any such sales must be approved by independent directors on the company’s board.
If Musk leaves Tesla before completing two years in an eligible leadership role, he will lose the right to receive the shares. However, if the company goes through a change in control and Musk is still in a qualifying position, the shares would vest immediately. He would need to buy the shares at a price of $23.34 each, the same price set in the 2018 compensation plan. That amount reflects Tesla’s stock value at the time the original plan was created.
It is important to note that the new structure is designed to prevent Musk from receiving both the new and old awards. If his appeal leads to the reinstatement of the 2018 plan, this new package would either be reduced or cancelled to avoid giving him both. According to the EV giant, the compensation was recommended by a special committee made up of independent directors, and Musk did not participate in the vote. Notably, Musk currently owns about 13% of the company, but if he receives all the new shares, his ownership could increase to around 16% (even higher if his 2018 plan is eventually restored).
This comes at a time when Tesla is undergoing a major shift. The company is increasingly focused on artificial intelligence (like the recent integration of xAI’s Grok chatbot with the 2025.26 software update), autonomous driving (with its debut in Austin), and robotics. Recently, Tesla also made its debut in India with the $70,000 Model Y. Last week, the company also launched its ride-hailing service in the San Francisco Bay Area, initially operating with safety drivers behind the wheel.
However, despite all these efforts, the company has still struggled in 2025, with its stock falling about 25% since the beginning of the year. Declining electric vehicle sales (especially in China), along with weaker policy support in the US, have hurt performance. In Q1 2025, Tesla reported its weakest results since 2022, with a 71% decline in profit and revenue of $19.3 billion. Investor concerns have also grown over Musk’s political activities and his increasing focus on other ventures, like xAI and SpaceX.
