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Tesla's Board Approves Musk's $2.6 Billion Pay Package, Boosting Stock
ByAinvest
Tuesday, Aug 5, 2025 6:34 pm ET1min read
Tesla's stock rose after its board approved a new pay package for CEO Elon Musk, giving him 96 million shares that will vest in two years if he remains CEO or in a related executive role. Investors hope the move keeps Musk at the helm, amid his involvement with other companies and plans to launch a political party. The package aims to keep Musk focused on Tesla's product development and operations.
Tesla's stock rose on Monday following the company's board approval of a new pay package for CEO Elon Musk. The package includes 96 million shares of restricted stock, which will vest in two years if Musk remains in his role as CEO or in a related executive position. The approval comes amid Musk's involvement with other companies and his plans to launch a political party.The new pay package mirrors the 2018 compensation structure that was challenged in court. Musk's 2018 pay package, valued at $56 billion, was invalidated by a Delaware judge in 2024 due to concerns about board independence and shareholder interests. The latest package aims to secure Musk's leadership and align his interests with Tesla's long-term value creation and strategic objectives, including its focus on AI, robotics, and autonomous driving.
Tesla's stock climbed more than 2% on Monday after the announcement, indicating that investors view the new package favorably. However, Morningstar analysts maintain their $250 per share fair value estimate for Tesla, noting that the stock is currently overvalued and recommending investors wait for a pullback before considering an entry point.
The approval of the new pay package also comes as Tesla faces significant financial challenges. The company reported a decline in quarterly profits and revenue in its most recent quarter, and has faced intensifying competition from both traditional automakers and Chinese companies. Despite these challenges, Tesla continues to innovate and expand its product offerings.
Musk's continued presence at Tesla is seen as critical as the company moves into uncharted product categories such as robotaxis and humanoid robots. Wedbush analyst Dan Ives has forecast that Musk will likely remain in his role until at least 2030, underscoring the strategic importance of leadership stability in the fast-evolving EV and tech sectors.
References:
[1] https://www.cnbc.com/2025/08/04/tesla-stock-musk-pay.html
[2] https://www.ainvest.com/news/tesla-announces-pay-package-elon-musk-stock-price-rises-slightly-2508/
[3] https://www.marketscreener.com/news/tesla-approves-ceo-musk-pay-package-consisting-of-96-million-shares-of-restricted-stock-update-ce7c5edadd8ef42d
[4] https://www.ainvest.com/news/tesla-approves-29b-stock-award-elon-musk-secure-leadership-2027-2508/
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