Elon Musk exercised approximately 304 million Tesla stock options on June 16 under his 2018 compensation plan, according to filings submitted to the U.S. Securities and Exchange Commission. The exercise followed the Delaware Supreme Court's restoration of the plan's legal validity in late 2025 after years of litigation. The 2018 plan, approved by Tesla's board, granted Musk stock options contingent on achieving market capitalization, revenue, and profitability milestones—targets many investors initially deemed unattainable when Tesla's market cap stood below $60 billion in 2018.
Musk Exercises 304 Million Options at $23.34 Strike Price
The SEC filing shows Musk exercised the options at a strike price of $23.34 per share. Based on Tesla's closing price of $404.66 on June 16, the total market value of the shares reached approximately $123 billion. The transaction used a net settlement method, with Tesla withholding approximately 1,753 shares to cover the exercise cost of roughly $7.09 billion. After deducting this cost, Musk's paper gain totaled approximately $116 billion (about 784 billion yuan).
Musk netted 286 million restricted shares after the exercise cost deduction. The shares carry full voting rights but cannot be sold or transferred before January 19, 2028. The transaction does not represent immediate cash proceeds for Musk.
Voting Rights Increase to 19.9% Following Exercise
According to calculations by The Wall Street Journal, Musk's voting rights in Tesla increased to 19.9% after completing the option exercise. Musk has stated publicly in recent years that he seeks to hold over 25% voting rights in Tesla to maintain control over artificial intelligence, autonomous driving, and humanoid robot development. He has warned that certain AI initiatives may not remain within Tesla's structure if his influence proves insufficient.
Delaware Supreme Court Restores 2018 Plan in Late 2025
In 2024, Delaware's Court of Chancery invalidated the 2018 compensation plan, citing insufficient board independence and inadequate disclosure. Tesla appealed the decision and obtained renewed shareholder approval at a subsequent meeting. The Delaware Supreme Court reversed the lower court's ruling in late 2025, restoring the plan's legal validity. In April of this year, Tesla and Musk signed an implementation agreement and filed related registration documents with the SEC. Two months later, all options were formally exercised.
The 2018 plan required Musk to forgo traditional cash salary and bonuses. Stock option awards were contingent on Tesla reaching specific market capitalization, revenue, and profitability targets. One of the highest targets set Tesla's market cap at $650 billion—a figure that appeared unattainable when the plan was approved and the company's market cap stood below $60 billion.
Restricted Shares Unlock January 19, 2028
The 286 million shares Musk received are subject to transfer restrictions until January 19, 2028. Until that date, the shares cannot be sold or transferred, though they carry full voting rights.
FAQ
What did Elon Musk do on June 16?
Elon Musk exercised approximately 304 million Tesla stock options on June 16 under his 2018 compensation plan, according to SEC filings. The exercise occurred at a strike price of $23.34 per share, resulting in a paper gain of approximately $116 billion based on Tesla's closing price of $404.66 that day.
Why did the Delaware Supreme Court restore Musk's 2018 compensation plan?
The Delaware Supreme Court reversed a 2024 Court of Chancery ruling that had invalidated the plan due to concerns about board independence and disclosure. The Supreme Court's decision in late 2025 restored the plan's legal validity, enabling Musk to proceed with exercising the stock options.
When can Musk sell the shares he received from exercising the options?
Musk cannot sell or transfer the 286 million shares until January 19, 2028. The shares carry full voting rights but remain restricted from sale or transfer until that date.
