Tesla’s board of directors has approved a new $29 billion stock award for CEO Elon Musk, following the invalidation of his previous pay package by a U.S. court. In a letter to shareholders, the board openly acknowledged concerns about Musk’s divided attention and political activities, portraying the new award as a way to address these issues. This “good faith” payment allows Musk to purchase 96 million shares at the original 2018 price for $2 billion.
The decision was recommended by a special committee of the board, 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 believes this new compensation package will be a strong incentive for Musk to remain with the company and secure his long-term dedication.
The company has faced brand damage, with reports suggesting that Musk’s political endorsements and his association with Donald Trump have negatively impacted Tesla 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 decline as “unprecedented,” highlighting the challenges the company faces due to its CEO’s public persona.
The new shares will increase Musk’s ownership from 13% to approximately 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.
