🧾 What Is This Letter About?
Tesla’s board wrote this letter (the link is the end of the article) to explain why they’re giving Elon Musk a new interim compensation package (a kind of stock award), even though there’s still an ongoing legal fight over his previous pay deal from 2018. l
🧩 Background: What Happened Before?
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2018 CEO Performance Award: In 2018, Elon was promised a big stock-based compensation package if Tesla hit very big goals. He hit all those goals.
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But… A court in Delaware later said that the process behind the deal might have been unfair, so they canceled that package—even though shareholders voted twice to approve it (in 2018 and 2024).
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Tesla is still fighting in court to get the 2018 package reinstated.
💰 So What Are They Doing Now?
Because this legal battle is dragging on, Tesla is doing a “good faith” payment—like a temporary partial reward—for Elon’s past and future contributions. It’s not the full 2018 deal, just about one-third of it.
🚨Important:
If Elon does end up winning back the full 2018 package in court, this new interim award goes away (so he doesn’t get double-paid).
🧠 Why Does Tesla Think Elon Deserves It?
Tesla says:
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Elon hasn’t taken meaningful pay since 2017, but has grown Tesla tremendously—creating $735 billion in shareholder value.
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His leadership is key to Tesla’s next phase: moving from just electric cars to becoming a leader in AI and robotics.
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Losing Elon would mean not just losing his talents, but also losing his ability to attract top talent (especially in AI).
🎁 What Is Elon Getting Exactly?
Here’s the breakdown of the interim award:
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96 million Tesla shares — but not for free.
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Elon has to buy them at ~$23.34/share (the same price as the 2018 award).
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He must stay at Tesla for 2 years to earn them.
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He can’t sell the shares for 5 years, except to pay taxes or the purchase price.
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If the courts reinstate the 2018 deal, either this award or part of the old one will be taken back.
📌 Why Now?
Tesla says:
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The competition for AI talent is intense—companies are offering huge pay packages just for engineers.
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Elon’s unique combination of leadership, vision, and track record is irreplaceable.
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They want to keep Elon focused on Tesla, not distracted by his other ventures like SpaceX, Neuralink, or xAI.
📅 What’s Next?
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This is just a first step.
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They plan to propose a long-term CEO pay plan at the annual shareholder meeting on November 6.
📣 Bottom Line (TL;DR):
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Elon hasn’t been paid in years but made Tesla incredibly valuable.
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Tesla wants to reward him with a smaller stock package while waiting for the court case to resolve.
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The new award encourages Elon to stay focused on Tesla.
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If the old deal comes back, this new one will be canceled to avoid overpaying.