The company said in a statement it will award an “interim” distribution of 96 million Tesla shares to Musk as it “intends to compensate its CEO for his future services commensurate with his contributions to our company and shareholders”.

“We have recommended this award as a first step, ‘good faith’ payment,” it added when announcing the board’s approval of granting new shares to Musk.

“Retaining Elon is more important than ever before.”

The massive pay package comes eight months after the judge in a Delaware court rejected Musk’s even larger US$55.8 billion compensation package at Tesla, denying an attempt to restore the pay deal through a shareholder vote.

In an initial decision in early 2024, the court struck down the package as excessive and unfair to shareholders.

Musk has appealed the ruling.

The new package would boost Musk’s roughly 13% stake in the company, at a time when he seeks to prevent a possible ouster by activist shareholders.

Musk would be required to forfeit the new compensation package should the appeals court rule in his favour and grant him the full 2018 compensation, which at the time was valued at US$55.8 billion.

The new payout is sure to fuel concerns about the compensation for Musk, already the world’s richest man, and whether the Tesla board is placing a sufficient check on the company’s chief executive.

The statement posted on Tesla’s X account came in the form of a letter to shareholders written by Robyn Denholm and Kathleen Wilson-Thompson, the two members of the board’s special committee addressing the Musk compensation.