Tesla board backs Elon Musk with new stock grant, says “A Deal is a Deal”

New Delhi: Tesla has taken a fresh step to compensate its CEO Elon Musk as the company continues its battle in Delaware courts over the long-disputed 2018 CEO Performance Award. In a letter sent to shareholders on August 4, 2025, Tesla's board announced a new "interim” compensation deal for Musk, calling it a "good faith” effort to uphold the original agreement from 2018.

This comes even as legal proceedings over that 2018 award remain stuck without a clear timeline. Tesla said the award brought massive returns to shareholders, adding nearly $735 billion to its market value, but Musk has not received any stock-based compensation since 2017. Despite repeated shareholder approval, the original award is still waiting to be reinstated by the Delaware Supreme Court.

The board’s letter was signed by Robyn Denholm and Kathleen Wilson-Thompson, the two members of a special committee formed to handle CEO pay matters. They wrote, "To recognize what Elon has accomplished and the extraordinary value he delivered to Tesla and our shareholders, we believe we must take action to honor the bargain that was struck in 2018. After all, ‘a deal is a deal.’”

Tesla said the new interim award gives Musk restricted stock equal to about one-third of what he would receive under the original 2018 deal. The letter clarified that if the court later rules in favor of Tesla and reinstates the full 2018 package, this interim award would be cancelled or returned to avoid "double dipping.”

According to the company, the new stock award includes 96 million restricted shares that Musk can purchase at a split-adjusted price of $23.34 per share. The shares will vest after two years, only if Musk stays in a senior leadership role at Tesla during that period.

There’s also a holding period of five years for the shares, with limited exceptions to pay taxes or cover the purchase cost. Sales for such purposes must be done in coordination with Tesla. The company also noted that the stock grant will be delivered only after getting approval from antitrust regulators.

In the letter, Tesla stressed that keeping Musk at the company is more important than ever. "Today, Tesla is at a critical inflection point,” the board said, noting the company’s shift from just electric vehicles to areas like AI and robotics. The committee said Musk’s presence is vital not just for leadership, but also for attracting top talent.

They added, "The war for AI talent is intensifying,” and pointed to recent industry trends where AI engineers have received multi-billion dollar buyouts or nine-figure pay packages. Tesla believes Musk’s record of building successful companies makes him unmatched in this landscape.

"Losing Elon would not only mean the loss of his talents but also the loss of a leader who is a magnet for hiring and retaining talent at Tesla,” the letter stated.

The special committee said it plans to bring a longer-term CEO compensation strategy to a shareholder vote during Tesla’s annual meeting on November 6. In the meantime, the board is pushing this interim award as a step to keep Musk focused on the company.

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They also mentioned reading feedback from shareholders on social media and direct messages. "From those communications, we know that one of your top concerns is keeping Elon’s energies focused on Tesla,” the letter said.

Whether the Delaware courts will eventually side with Tesla remains to be seen. But the message from the board is clear: the company wants Musk to stay, and it’s willing to act now while legal challenges continue.