Tesla Board Proposes Interim CEO Award for Elon Musk Amid Ongoing Delaware Litigation

Tesla’s Board of Directors has recommended an unprecedented interim compensation package for CEO Elon Musk, aiming to recognize his contributions and ensure his continued leadership as the electric automaker pivots toward artificial intelligence and robotics.

Background: Ongoing Legal Limbo

Since 2018, Musk’s landmark CEO Performance Award—which could have earned him substantial stock options—has remained mired in Delaware court battles, despite repeated strong endorsements from shareholders in both 2018 and 2024. The ongoing litigation has left Musk “without meaningful compensation for eight years,” according to a letter released by Tesla’s Special Committee. Shareholders, the letter states, overwhelmingly support honoring the 2018 deal, which credited Musk with adding $735 billion in market capitalization at a cost of $2.3 billion in stock-based compensation.

“Despite delivering such extraordinary returns, that award continues to be in legal limbo,” the Special Committee noted, adding that there is “no clear timeline for resolution,” with hearings still pending before the Delaware Supreme Court.

A Letter to Our Shareholders on the 2025 CEO Interim Award

Dear Fellow Tesla Shareholders,

Today we announce an important first step in compensating Elon Musk for his extraordinary work at Tesla. As you know, Elon has not received meaningful compensation for eight years since…

— Tesla (@Tesla) August 4, 2025

Details of the Interim Award

To address immediate retention needs, the Board has approved the Special Committee’s recommendation for an interim award that grants Musk 96 million restricted shares—about one-third of the original 2018 package. The shares are subject to a two-year vesting period, require Musk to pay the split-adjusted 2018 exercise price of $23.34 per share, and come with a five-year holding requirement (outside of payments for taxes or purchase price).

Crucially, the award will be rendered void if the Delaware courts ultimately reinstate the 2018 package—Musk would not be able to “double dip.”

Other terms include:

• Musk must serve continuously in a senior leadership role at Tesla for two years.

• Allowance to pledge shares to cover taxes or purchase price.

• All shares subject to a mandatory five-year holding period, with exceptions only for tax or purchase-related sales, organized in coordination with Tesla.

Talent Retention and the Road Ahead

Tesla’s Board cited the growing competition and “war for AI talent,” pointing to recent nine-figure compensation packages offered to leading engineers in the industry. The letter sharply emphasized Musk’s central importance, stating, “No one matches Elon’s remarkable combination of leadership experience, technical expertise, and, arguably most importantly, decades-long proven track record of building the most revolutionary and profitable businesses across different industries.”

The Special Committee asserted that Musk’s presence acts as a powerful magnet for recruiting and retaining top talent. “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.”

Shareholder Feedback and Next Steps

According to the Special Committee—headed by Robyn Denholm and Kathleen Wilson-Thompson—the decision incorporated feedback from shareholder letters and social media posts, all signaling a desire to keep Musk’s attention centered on Tesla. The interim award is described as a “first step,” with further long-term strategies to be proposed for shareholder approval at the company’s annual meeting, scheduled for November 6.

“We are also working on next steps to address that issue. Still, while our work remains ongoing, we feel it is important to communicate directly and transparently with you all, our shareholders and Tesla’s owners,” the Committee wrote.

This interim measure underscores Tesla’s commitment to retaining its high-profile CEO while awaiting the legal fate of the original 2018 package. The saga continues, with major implications for Tesla’s future as it enters a new era beyond electric vehicles—aiming for leadership in AI and robotics.