Tesla’s board of directors has approved a new $29 billion stock award for CEO Elon Musk, a move they say is meant to “recognise what Elon has accomplished and the extraordinary value he delivered to Tesla.” This decision follows a US court’s invalidation of his previous pay package. The award, recommended by a special committee, is a “good faith” payment that allows Musk to acquire 96 million shares at the original 2018 price for $2 billion.
In a letter to shareholders, board members Robyn Denholm and Kathleen Wilson-Thompson acknowledged concerns about Musk’s divided attention due to his many other ventures and political activities. They believe the new award is a “critical first step” toward “keeping Elon’s energies focused on Tesla” and securing his long-term commitment.
Musk’s political endorsements and his relationship with Donald Trump have reportedly hurt the company’s brand and sales. A survey from S&P Global Mobility showed a sharp and “unprecedented” decline in customer loyalty, with the percentage of repeat buyers falling significantly. This data highlights the challenges the company faces due to its CEO’s public persona.
The new shares will increase Musk’s ownership stake from 13% to about 15%, giving him greater voting power. Musk has long argued that more control is necessary to protect the company from activist shareholders as it pivots its strategy toward AI and robotics. The board’s letter confirms that the award is designed to gradually increase his influence, ensuring his leadership. This new compensation package will be forfeited if the original 2018 deal is reinstated.