The world’s richest person, Elon Musk, has seen his wealth grow even more with a substantial bonus from Tesla, described as a ‘good faith’ payment.
Currently, Elon Musk’s net worth is estimated at $400 billion, according to Forbes. This increase is partly attributed to the substantial compensation package Musk received from the electric vehicle company he leads.
The payment was made out of ‘good faith’ after Musk’s previous $56 billion bonus deal from 2018 was annulled in December 2024. Delaware Chancellor Kathaleen St Jude McCormick had determined that Tesla must cancel Musk’s massive pay arrangement.
In spite of this, Tesla’s board members believed Musk deserved a large sum of money.
“To recognise what Elon has accomplished and the extraordinary value he delivered to Tesla and our shareholders, we believe we must take action to honour the bargain that was struck in 2018,” the directors wrote. “After all, ‘a deal is a deal’.”
The company has granted Musk 96 million shares of restricted stock, valued around $29 billion, merely six months after a judge mandated the bonus be rescinded.
However, Musk is required to pay $2 billion to acquire the shares, which works out to $23.34 per share, matching the price per share of the 2018 compensation package awarded to the Tesla CEO.
Tesla has indicated that if Musk’s original 2018 compensation package is reinstated following his ongoing appeal, he will give up the new one.
This decision emerged from a lawsuit filed by a Tesla stockholder challenging Musk’s 2018 compensation plan.
The 2018 compensation package had a potential maximum value of around $56 billion, although this amount has varied over time with Tesla’s stock price.
Judge McCormick concluded that Musk had orchestrated the significant pay package through mock negotiations with directors who were not independent.
Musk contested the ruling in March. Subsequently, Tesla mentioned in a regulatory filing in April that it was establishing a special committee to review Musk’s compensation as CEO.
Wedbush analyst Dan Ives believes that Musk’s stock award might ease some concerns among Tesla shareholders.
“We believe this grant will now keep Musk as CEO of Tesla at least until 2030 and removes an overhang on the stock,” Mr Ives wrote in a client note.
“Musk remains Tesla’s big asset and this comp issue has been a constant concern of shareholders once the Delaware soap opera began.”
Tesla shares have dropped 25 percent this year, largely due to Musk’s association with President Donald Trump and their subsequent disagreements.