Retaining Elon is more important than ever before as…, says Tesla board in letter to shareholders as Elon Musk gets highest ever CEO pay package
's board has awarded CEO Elon
Musk
a massive $29 billion stock package, describing it as a "first step, good faith payment" while emphasizing that retaining the world's richest man is critical as the electric vehicle maker pivots toward artificial intelligence and robotics.
"Retaining Elon is more important than ever before," board members Robyn Denholm and Kathleen Wilson-Thompson wrote in a letter to shareholders Monday. "Today, Tesla is at a critical inflection point that has the potential to create continued extraordinary value for you, the shareholders."
The new compensation package consists of 96 million restricted shares, valued at approximately $29 billion based on current stock prices. This represents roughly one-third of Musk's controversial 2018 pay package, which remains tied up in Delaware courts after a judge struck it down twice, despite shareholder approval.
Tesla board says intensifying AI talent war is the reason why they want Elon Musk as CEO, even if it takes $29 billion
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The Tesla board justified the enormous payout by pointing to escalating competition for artificial intelligence talent, with recent months seeing "multi-billion-dollar acquisitions of companies and nine-figure cash compensation packages for non-founder, individual AI engineers."
"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 board stated.
The package requires Musk to serve continuously in a senior leadership role at Tesla for two years and includes a five-year mandatory holding period. Importantly, if Delaware courts reinstate the 2018 package, this interim award will be forfeited to prevent any "double dip."
Tesla faces mounting challenges despite record CEO pay
The announcement comes as Tesla confronts significant headwinds, including a 25% stock decline this year and intensifying competition from Chinese rivals. The company reported quarterly profits plummeting from $1.39 billion to $409 million in its most recent quarter.
Critics question whether such massive compensation is justified given Tesla's current struggles. However, board members emphasized Musk's track record, noting the 2018 award "resulted in a $2.3 billion stock-based compensation charge to Tesla but brought about $735 billion of increased market capitalization."
The board acknowledged concerns about Musk's divided attention across multiple ventures, including xAI, SpaceX, and his role in the Trump administration, but expressed confidence the award will "incentivize Elon to remain at Tesla and focus his unmatched leadership abilities on further creating shareholder value."
Tesla plans to present a longer-term CEO compensation strategy at its November 6 annual shareholder meeting.
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