Electric car maker Tesla has approved a fresh pay package worth $29 billion (about Sh3.8 trillion) for its chief executive Elon Musk, even as a court battle over a previous multi-billion-dollar compensation deal remains unresolved.

In a statement released on Monday, Tesla said it would issue an "interim" distribution of 96 million shares to Musk as a way of rewarding him for his continued leadership and contribution to the company.

The board described the move as the first step in a renewed effort to fairly compensate the CEO.

"We have recommended this award as a first step, 'good faith' payment," the company said, emphasizing that the goal was to align Musk’s future service with the company’s long-term success. "Retaining Elon is more important than ever before."

The decision comes eight months after a Delaware judge blocked Musk’s earlier $55.8 billion compensation package, which had been tied to specific company milestones and approved by shareholders in 2018. The court found the deal excessive and ruled that it had not been properly negotiated. Musk has since appealed that decision.

Should the appeal succeed and the original package be restored, Musk would be required to give up the newly approved compensation.

If upheld, the new award will strengthen Musk’s ownership in the company, increasing his current 13 percent stake and helping him solidify his leadership at a time when he faces growing pressure from activist shareholders.

The announcement was delivered in a letter to shareholders posted on Tesla’s official X account. The letter was signed by Robyn Denholm and Kathleen Wilson-Thompson, who are part of the board’s special committee on Musk’s compensation.

While the new pay deal may ease tensions between Musk and the company board, it is expected to reignite debate over whether the world’s richest man should continue receiving such high levels of compensation and whether Tesla’s board is effectively overseeing its CEO.