Tesla appears to be solidifying its ties with CEO Elon Musk as a newly formed special committee offers him a massive new pay package. The proposal would grant Musk 96 million shares of company stock – worth nearly $30 billion – as an incentive to stay with the automaker.
Compensation history and court involvement
The move comes as Musk continues to challenge a Delaware court ruling that voided his 2018 compensation plan, previously valued at more than $50 billion. The court struck it down in 2024, calling the deal unfair to shareholders. Musk appealed, prompting Tesla to create a special committee to reassess his compensation.
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According to CNBC, Musk currently holds a 13% stake in Tesla. In a statement, the committee said, “While we recognize Elon’s business ventures, interests and other potential demands on his time and attention are extensive and wide-ranging… we are confident that this award will incentivize Elon to remain at Tesla.”
Tesla trying to reinvent itself
Financial analysts say Tesla is trying to shift its image – from a pure electric vehicle (EV) maker to a broader tech company focused on AI, robotics and autonomous vehicles. Musk has been increasingly vocal about Tesla’s ambitions in humanoid robots and robotaxis, with plans to move beyond just cars.
The new compensation package not only boosts Musk’s potential stake in the company – it also comes with strings attached. He must stay in a top leadership role through 2027 to fully benefit from the 96 million shares. There is a holding period for the stock.
The package includes a “no double-dip” clause, meaning if Musk’s original 2018 pay package is reinstated in court, it would cancel or reduce the current offer.
EV competition heats up
Tesla shares are down about 25% this year amid falling vehicle sales and shrinking federal EV subsidies. Major competitors like General Motors, Hyundai and BMW are aggressively cutting into Tesla’s market share.
Even Tesla’s long-hyped Cybertruck has struggled to gain traction, despite Musk’s past predictions of “hundreds of thousands” of annual sales. CNBC reports the truck has largely underwhelmed since its debut in 2020.
Brand loyalty troubles
According to Reuters, Tesla’s brand loyalty “plunged” after Musk publicly endorsed Donald Trump in the 2024 presidential race. Citing S&P Global Mobility, the report says Tesla’s customer retention rate – owners buying another Tesla – dropped from 73% to just 49.9% by March.
At the same time, Musk was heading President Trump’s Department of Government Efficiency (DOGE) and overseeing sweeping job cuts and budget reductions. One S&P analyst called the loyalty decline “unprecedented.”
By May, loyalty had rebounded slightly to 57.4% – coinciding with Musk’s very public split from Trump, triggered by Musk’s criticism of the president’s “Big, Beautiful, Bill.” Musk later resigned from DOGE and announced plans to start a third political party.
