Follow-up Measures After 2018 Compensation Plan Was Nullified
Tesla: "This Will Serve as an Incentive for Musk to Stay with the Company"
On August 4, 2025 (local time), U.S. electric vehicle company Tesla approved a new compensation plan granting CEO Elon Musk stock options worth approximately $29 billion (about 40 trillion won).
According to Bloomberg and CNBC, Tesla announced in a report submitted to the U.S. Securities and Exchange Commission (SEC) on this day that its board of directors made this decision based on the recommendation of a special committee.
The total number of shares Musk will receive is 96 million, with an exercise price of $23.34 per share. This compensation plan will only be granted if he remains as CEO for the next two years.
This decision comes after the previous compensation plan, which was set in 2018 to grant Musk $56 billion (about 77 trillion won) based on his management performance, was invalidated by a Delaware court. In December of last year, the court ruled that the board’s approval process was flawed and that the stock options for Musk were unfair to shareholders, thus deeming the grant unlawful.
In response, Tesla’s board of directors appealed the ruling and simultaneously formed a special committee to develop a new compensation plan.
Musk has repeatedly stated that he could leave Tesla if he is not given sufficient control. He also claimed that activist investors were pressuring him and that he was at risk of being ousted. Tesla’s board explained that this measure is intended to encourage Musk to remain with the company.
In a letter to shareholders, Tesla stated, "Elon's continued presence is more important than ever," and added, "We are confident that this compensation plan will serve as an incentive for him to stay with Tesla." The company also explained that if a higher court decides to reinstate the 2018 compensation plan, the new plan will be canceled and there will be no double payment.
If this new compensation plan is implemented, Musk’s stake in Tesla will increase from less than 13% to around 16%. As a result, his control over the company will be further strengthened, and the likelihood of him remaining as CEO will also increase. In a Bloomberg interview in May, Musk stated that he expects to remain CEO even five years from now.
Meanwhile, on this day, Tesla’s stock price closed up 2.19% at $309.26, bringing its market capitalization to $997.5 billion.
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