Despite Tesla’s 25% stock drop in 2025 and ongoing legal setbacks, the board has once again backed CEO Elon Musk with a massive $29 billion pay deal — reigniting debate about leadership, accountability, and Tesla’s shifting focus from EVs to AI and robotics.
Tesla has proposed a $29 billion stock-based compensation package for Elon Musk, equivalent to nearly 96 million shares, each priced at $23.34 — matching terms from the 2018 performance-based plan that was struck down earlier this year by a Delaware court.
🚨 Important: The package is still under legal review and not finalized, but Tesla’s board continues to pursue reinstatement.
According to Tesla’s board, Musk has not received “meaningful compensation” in eight years and has met the growth milestones that justify the package — citing Tesla’s past expansion under his leadership.
💼 Why It Matters to Shareholders
Musk’s pay is directly linked to stock performance, not a cash salary. While this aligns with shareholder value creation, it also raises questions:
- Tesla’s stock is down 25% in 2025
- Public perception has shifted, partly due to Musk’s political involvement
- Company revenue is under pressure, with U.S. policy changes reducing EV subsidies and credits
Despite all this, Tesla’s board says Musk’s continued leadership is crucial to its long-term transformation into a technology-first company.
🏛️ Legal & Political Headwinds
The $29 billion award follows a court ruling that voided Musk’s 2018 pay deal after a shareholder lawsuit, citing governance failures. Musk is currently appealing the decision.
Meanwhile, his political activity — campaigning and funding Republican candidates — drew backlash that directly impacted Tesla:
- Protests at Tesla dealerships
- Policy changes under President Trump that stripped key EV incentives
- Fall in U.S. sales volume, one of Tesla’s core markets
🔄 The Pivot: From EV to AI & Robotics
Faced with declining car sales, Musk has publicly recommitted to Tesla, signaling a strategic shift from pure EV production to AI, robotics, and autonomous services. His vision: a Tesla that leads in self-driving tech and humanoid robotics, not just electric vehicles.
The company is currently launching a scaled-down robotaxi service, part of Musk’s long-promised automation dream — though it falls short of earlier bold projections.
📉 Stock Reaction & Market Outlook
- Tesla shares fell 25% YTD (2025), underperforming the Nasdaq
- The stock rose ~3% in premarket trading after the new compensation news
- Analysts are split — some applaud the move for aligning leadership incentives; others warn of distractions and governance risks
⚖️ What This Means for Investors
The revival of Musk’s compensation comes at a crossroads for Tesla:
| Factor | Impact |
|---|---|
| Legal uncertainty | Shareholder risk remains high |
| AI/robotics pivot | New growth path, but execution key |
| Political image | Affects consumer and regulatory trust |
| Compensation controversy | Could trigger further legal scrutiny |
📝 Final Word
Tesla’s board is betting big — again — on Elon Musk’s ability to reinvent the company, even as the challenges mount. Investors must now weigh the promise of futuristic transformation against real-time risks: legal, reputational, and operational.
