Tesla has approved a new Sh4.5 trillion share award for Elon Musk, signalling its determination to retain him as chief executive, even as legal efforts continue to overturn a court ruling that cancelled his earlier Sh8.7 trillion compensation plan.

The company informed shareholders on Monday that it expects the share grant to strengthen Musk’s commitment to the business, particularly at a time when competition for artificial intelligence talent is heating up.

Tesla’s move comes as Musk challenges a decision by the Delaware Court of Chancery, which struck down his 2018 pay package in early 2024.

The court had ruled that the deal, the largest corporate pay agreement ever approved in the US, was not in shareholders’ best interests.

Musk’s legal team has accused the court of misapplying the law and insists that such pay matters should be decided by shareholders, not judges.

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Even as that appeal plays out, Tesla has opted to move forward with a fresh award, which is expected to increase Musk’s voting power within the company.

If the court eventually reinstates the original 2018 deal, Musk would be required to return or surrender the new shares to avoid receiving both.

Tesla’s board has defended its decision to offer the package, stating plainly, “It is imperative to retain and motivate our extraordinary talent, beginning with Elon.” 

The company added that Musk’s blend of leadership and technical ability remained unmatched.

“No one matches Elon’s remarkable combination of leadership experience, technical expertise,” the board wrote in a message shared on X, a social media platform also owned by Musk.

Tesla described the billionaire as a founder who had repeatedly proven his ability to build groundbreaking and profitable companies.

The original 2018 agreement was heavily performance-based.

Musk was only to be compensated if Tesla reached specific benchmarks tied to market capitalisation, sales, and adjusted earnings.

All of those milestones were ultimately achieved.

Tesla noted that if the court were to uphold the original Sh8.7 trillion deal, Musk would not be allowed to benefit from both packages.

The company said he would either give up the new shares or return them in full, a move it called necessary to prevent a “double dip”.

Though some shareholders have questioned the scale of the reward, others believe the company has little choice.

With Musk increasingly drawn into ventures beyond Tesla, including his work with SpaceX and several AI firms, the board appears determined not to lose his focus.

By advancing this new offer, Tesla is making a clear statement that the man at the centre of its rise remains central to its future.