Elon Musk is trending in the news yet again. However this time it is not because of robotaxi, new rocket or electric vehicle launch. The billionaire is being talked about a massive pay package from Tesla's board.
In a letter to shareholders on August 4, 2025, Tesla announced an award for Elon Musk of 96 million Tesla shares, worth roughly $29 billion. This has sparked strong debate among investors and governance experts as the package comes after a long legal fight over an earlier and even larger pay plan.
In this blog, we will explain the key parts of the new package, the legal issues behind it, and what it could mean for the future of the EV company and Elon Musk.
What Is Elon Musk’s $29 Billion Pay Package From Tesla?
This compensation is not a cash salary. Instead it is a large grant of stock options. It allows Musk to buy 96 million Tesla shares at $23.34 each, the same price used in the disputed 2018 pay plan. Since Tesla shares are now worth over $300 each, this could be a huge profit on paper for Elon Musk. The deal is designed to keep Musk at Tesla: the shares will only become his on August 3, 2027, if he’s still an executive, and he can’t sell them until August 3, 2030.
This new plan was created after a major legal setback. In January 2024, a Delaware judge, Kathaleen McCormick, canceled Elon Musk’s 2018 pay package, which was originally worth up to $56 billion. She called the amount “unfathomable” and said Tesla’s board was too focused on the potential upside and didn’t stop to ask whether the package was actually needed to keep Musk at the company.
Even though shareholders had approved the plan, the court ruled that the approval process was flawed. Tesla is appealing the ruling, but the new $29 billion pay plan is meant to temporarily compensate Musk while the legal case plays out.
To understand this better, imagine a family promises their son a lavish wedding if he secures a top rank in a competitive exam. He achieves the rank, but a dispute arises within the family about the fairness of the reward, leading to a "panchayat" that puts the original promise on hold. While that dispute is being sorted out, the family offers a smaller, but still significant, gift to ensure the son remains committed to the family's future.
This is similar to what Tesla's board is doing with this new pay package while the larger one is tied up in legal proceedings.
Elon Musk’s Net Worth Decoded: Fortune Built on Tesla Stock
As of August 5, 2025, Elon Musk is the world's richest individual with a net worth of $357 billion, according to the Bloomberg Billionaires Index. Many people wonder how Musk became so wealthy without getting a regular salary from Tesla. The reason is that all his pay comes from performance-based stock options. His wealth grows when Tesla’s stock price and overall value go up.
Musk owns about 13% stock of Tesla, making him its biggest individual shareholder, so his success is tied to Tesla’s success. If this new stock award goes through, he would end up with more than 506 million Tesla shares. This setup is meant to motivate him to increase the company’s value, which also inflates his personal net worth.
Tesla Shareholder Protests and Market Volatility
The reaction from shareholders on Elon Musk has been deeply divided in the recent months. His focus on politics, particularly his short stint as leader of cost-cutting arm DOGE for the Trump administration, caused Tesla's stock to suffer and drew the ire of many investors.
This, combined with political opponents protesting at dealerships and the stripping of EV tax incentives, has contributed to a sharp fall in the company's sales, and market cap. Year-to-date, Tesla’s market cap has fallen around 25%, according to CompaniesMarketCap data. Despite this, a significant portion of the shareholder base sees Musk as indispensable.
Musk’s recent commitment to return his full-time focus to Tesla was a key demand from this group. The Tesla board's letter stated, "rewarding Elon for what he has done and continues to do for Tesla is the right thing to do." This sentiment is echoed by several analysts who noted the package was a strategic move by the board to solidify Musk as CEO of Tesla over the coming years.
Some analysts also believe that this pay package is a strategic move from the board amid AI talent wars to prevent Musk from shifting his focus to his other ventures like xAI.
Tesla’s Pivot to AI and Robotics
This entire saga is unfolding as Tesla is attempting a monumental strategic shift in its business. Amid slowing EV sales and increased competition from the likes of BYD and Hyundai, Musk is repositioning the company to focus on artificial intelligence (AI) and robotics.
The billionaire has even expressed a desire for 25% voting power at Tesla to fully steer these AI initiatives. In the letter to shareholders, Tesla board members Robyn Denholm and Kathleen Wilson-Thompson wrote, "Through Elon’s unique vision and leadership, Tesla is transitioning from its role as a leader in the electric vehicle and renewable energy industries to grow towards becoming a leader in AI, robotics and related services."
The much talked about but smaller launch of Tesla's robotaxi service is the first big public move in this new direction. The $29 billion pay package shows that the company board is placing a bold bet on Musk since they believe that his vision is necessary for Tesla's survival and future growth.
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