Tesla’s board of directors formally approved the grant of 96 million restricted shares to CEO Musk on August 3. The compensation package, worth about $29 billion, marks a significant investment by the company in its leaders during a critical period of transformation. Musk is required to buy the shares at $23.34 per share, according to the filing with the Securities and Exchange Commission. This price is consistent with the exercise price of the 2018 salary plan.

In 2018, Tesla shareholders voted to pass a compensation plan to provide Musk with large-scale stock option incentives. The agreement was initially valued at $2.6 billion, but as the stock price rose, its value climbed to $56 billion at the beginning of 2024. However, the Delaware court revoked the compensation package in 2024. The court held that Musk designed the landmark compensation plan by inappropriate negotiations with directors who lack independence.

The court’s judgment pointed out that Tesla’s board of directors had flaws in approval procedures. This practice constitutes unfair treatment for shareholders’ rights. Musk appealed the ruling in March this year, claiming that the plan has brought significant growth to Tesla. Meanwhile, Musk moved Tesla’s registered place from Delaware to Texas and used the court’s judgment as part of the reason for the migration.

The special committee formed by Tesla’s board of directors is responsible for reevaluating Musk’s compensation. In a letter to shareholders, the committee defined the issuance of 96 million shares as a temporary reward. If Musk continues to hold senior management positions for two years and the Delaware court upheld the original verdict, he will be eligible to apply for a new reward. On the contrary, if the court fully resumes the 2018 performance award, the new temporary award will be forfeited, avoiding the situation of double benefits.