Tesla’s board of directors has approved a new $29 billion stock award for CEO Elon Musk, a move that comes after his previous pay package was invalidated by a U.S. court. The board, in a letter to shareholders, directly addressed concerns about Musk’s political engagements and divided attention, positioning the new award as a solution to these issues. The award, framed as a “good faith” payment, allows Musk to purchase 96 million shares at the 2018 price for $2 billion.
A special committee, including chair Robyn Denholm and director Kathleen Wilson-Thompson, recommended the award, stating it is a “critical first step” toward “keeping Elon’s energies focused on Tesla.” The board’s belief is that this new compensation package will serve as a powerful incentive for Musk to remain at the company and secure his long-term dedication.
The company has seen its brand image suffer, with reports suggesting that Musk’s political endorsements and his relationship with Donald Trump have negatively impacted Tesla sales. A survey from S&P Global Mobility revealed a sharp decline in customer loyalty, with the percentage of repeat buyers falling significantly. An analyst called this drop “unprecedented,” underscoring the challenges the company faces because of 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 focuses on a new strategy of AI and robotics. The board’s letter confirms that the award is designed to incrementally increase his influence, ensuring his leadership. The new compensation will be forfeited if the original 2018 deal is reinstated.