Is Elon Musk Leaving Tesla? £21B Pay Package Aims to Keep Billionaire CEO in Charge

Tesla has approved a staggering pay package worth around £21.7 billion (US $29 billion) for CEO Elon Musk in a bold move to secure his continued leadership. The decision comes as the electric vehicle giant faces an ongoing legal battle over Musk's previous record-breaking pay deal, putting his future at the company in question.

The package is designed to keep Musk at Tesla's helm during a critical period of transformation, as the company shifts focus from being solely an electric car manufacturer to a leader in AI and robotics.

Massive Stock Grant Amid Legal Dispute

According to The Verge, Tesla's board has awarded Musk 96 million restricted shares valued at about £21.7 billion. The deal comes in the wake of a Delaware court ruling in 2024 that voided his 2018 pay award, originally worth more than £37.5 billion (US $50 billion). The court found that the earlier deal's approval process lacked proper independence and did not sufficiently safeguard shareholder interests.

Although Tesla shareholders had approved the 2018 award twice, the court argued the board was too closely aligned with Musk. The new package aims to retain him while appeals over the previous deal continue. If the 2018 package is reinstated, the newly granted shares will be forfeited to prevent double compensation.

Board chair Robyn Denholm and director Kathleen Wilson-Thompson told shareholders that the deal would 'incentivise Elon to remain at Tesla and focus his unmatched leadership abilities on further creating shareholder value and attracting top talent'.

Enhanced Control for Musk

The colossal pay deal will significantly bolster Musk's voting power at Tesla, reinforcing his influence over strategic decisions. Musk currently owns about 13% of the company, making him its largest individual shareholder. He has previously expressed his desire for greater control to ensure Tesla stays on course, while acknowledging that safeguards should remain in place.

The shares will vest over several years, requiring Musk to purchase them at £17.52 (US $23.34) each — the same price as his 2018 deal — and tying his compensation directly to his continued role as CEO through at least 2027.

Why Tesla Wants Musk to Stay

Tesla's board believes Musk's leadership is vital for maintaining shareholder value and attracting top-level talent in a fiercely competitive market. Beyond electric vehicles, the company is now positioning itself as a pioneer in AI and robotics.

Denholm and Wilson-Thompson have pointed to Musk's history of driving unprecedented growth as evidence that his leadership is essential. Wedbush Securities analyst Dan Ives described Musk as Tesla's 'biggest asset' and said the new deal marks a 'huge step forward' in the rapidly evolving tech race.

Was Musk Considering Leaving?

Earlier in 2024, reports suggested Musk was considering stepping down from Tesla due to mounting challenges and his multiple business commitments, according to Yahoo Finance. He reportedly felt that no one else shared his vision of transforming Tesla into a robotics and automation leader.

Rumours of a CEO search were dismissed by Denholm, who reiterated the board's confidence in Musk's leadership. Musk himself admitted to managing his companies with 'great difficulty' but has since pledged to focus more on Tesla and scale back his political involvement.

The board sees Musk as indispensable for Tesla's long-term ambitions, particularly as it navigates its transition into AI and robotics. This new pay package is both a strategic and symbolic commitment to keeping the company's most influential figure firmly in place during a pivotal chapter in its history.