Lawsuits, falling EV sales, and a voided pay plan push Tesla to resecure Musk with 96m-share award
Tesla has granted Elon Musk 96 million restricted shares worth about US$29bn in an effort to retain its CEO amid a series of legal, operational, and reputational challenges.
The company said the award aims to keep Musk “focused” on Tesla despite growing involvement in other ventures, as reported by BNN Bloomberg.
This move follows a Delaware court’s decision to revoke Musk’s 2018 compensation package—initially valued at US$56bn—for the second time.
As per court records cited by CNBC, Delaware Chancellor Kathaleen McCormick found that Musk had orchestrated the plan through sham negotiations with non-independent board members.
Tesla has appealed the ruling, which is now before the state Supreme Court.
In the meantime, Tesla said in a regulatory filing that the new award will vest in two years, contingent on Musk remaining as CEO or holding another key executive role.
However, Musk must pay US$23.34 per share—matching the exercise price from the disputed 2018 plan. The award will be forfeited if the legal process allows Musk to exercise the original package.
As per CNN, Tesla board chair Robyn Denholm and director Kathleen Wilson-Thompson defended the new compensation, stating Musk “has not received meaningful compensation for eight years” and has delivered “transformative and unprecedented growth.”
The company said Tesla’s market value has risen by US$735bn since 2018.
Despite the award, investor scrutiny persists.
A group of more than 20 shareholders had called on Tesla to schedule its annual meeting, which is now set for November in compliance with Texas law, according to BNN Bloomberg.
Tesla stock climbed nearly 3 percent in premarket trading and rose nearly 2 percent by midday.
Tesla’s financials show declining momentum.
As reported by BNN Bloomberg, quarterly profits dropped from US$1.39bn to US$409m, while automotive revenue fell 16 percent.
The company also missed Wall Street’s revised expectations.
Musk said on an earnings call that Tesla “could have a few rough quarters,” citing the potential impact of expiring EV tax credits and rising tariff costs.
Shareholder lawsuits are mounting.
Reuters reported that Tesla and Musk are being sued in a proposed class action filed Monday in Austin, Texas, alleging securities fraud tied to Tesla’s self-driving technology.
The suit accuses them of overstating the safety and effectiveness of robotaxis, which performed erratically during June tests.
Tesla’s market value dropped by US$68bn over two trading days following the test.
The robotaxi program has become central to Tesla’s new business strategy, as it shifts focus from vehicle sales to AI and robotics.
However, a Florida jury recently found Tesla 33 percent liable for a 2019 crash involving its self-driving software, awarding US$243m in damages.
Tesla plans to appeal.
Tesla’s market performance has suffered. Shares have fallen 25 percent year-to-date, as reported by BNN Bloomberg.
Musk’s political activity—including efforts to support US President Donald Trump’s reelection and his appointment as a special government employee—has drawn backlash that has hurt Tesla’s brand and sales in both the US and Europe.
Sales data reflect this.
CNBC reported that in July, Tesla’s new car sales fell 60 percent in the UK and 55.1 percent in Germany. Over the first seven months of 2025, Tesla’s German sales dropped 57.8 percent.
Meanwhile, Chinese rival BYD sold 3,184 units in the UK, more than quadrupling its sales, and posted a 390 percent year-on-year sales increase in Germany.
According to the European Automobile Manufacturers Association, Tesla’s European market share has declined for six consecutive months as of June.
The new award was approved by a special committee of the board, which included Denholm and Wilson-Thompson, according to CNBC.
The filing states that the package does not restrict Musk from launching new businesses or participating in political work. Public records show Musk formed AI company xAI in 2023 without prior disclosure to Tesla shareholders.
Tesla is now integrating xAI’s chatbot Grok into its electric vehicles.
Musk remains Tesla’s largest individual shareholder, holding about 13 percent of the company.
In January 2024, he posted on X that he was “uncomfortable growing Tesla to be a leader in AI & robotics without having ~25% voting control.”
Wedbush analyst Dan Ives, cited by BNN Bloomberg, said the grant could bring some stability to Tesla.
“We believe this grant will now keep Musk as CEO of Tesla at least until 2030,” he said, adding that it also removes an overhang on the stock.
