In a high-stakes decision, Tesla’s board of directors has approved a new $29 billion stock award for CEO Elon Musk, a move that follows a U.S. court’s invalidation of his previous pay package. A letter to shareholders from the board openly addressed concerns about Musk’s political activities and divided attention, positioning the new award as a solution to these issues. This “good faith” payment enables Musk to purchase 96 million shares at the original 2018 price for $2 billion.
The decision was recommended by a special committee, which included chair Robyn Denholm and director Kathleen Wilson-Thompson. They stated that the award is a “critical first step” toward “keeping Elon’s energies focused on Tesla.” The board is betting that this new compensation package will incentivize Musk to remain committed to the company and secure his long-term dedication.
The company’s brand has reportedly suffered, with reports indicating that Musk’s political endorsements and his relationship with Donald Trump have negatively impacted sales. A survey from S&P Global Mobility showed a steep drop in customer loyalty, with the percentage of repeat buyers falling significantly. An analyst described this drop as “unprecedented,” highlighting the challenges the company faces due to its CEO’s public persona.
The new shares will increase Musk’s ownership stake from 13% to roughly 15%, giving him greater voting power. Musk has consistently 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.
