In a controversial move, Tesla’s board of directors has approved a new $29 billion stock award for CEO Elon Musk, following a U.S. court’s invalidation of his previous pay package. In a letter to shareholders, the board addressed the concerns about Musk’s political activities and divided attention, positioning the new award as a strategic way to deal with these issues. The award, a “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 described the award as a “critical first step” toward “keeping Elon’s energies focused on Tesla.” The board’s rationale is that this new compensation package will be a powerful incentive for Musk to remain with the company and secure his long-term commitment.
The company has been facing headwinds, with reports suggesting that Musk’s political endorsements and his association with Donald Trump have damaged the Tesla brand and its sales. A survey from S&P Global Mobility showed a sharp decline in customer loyalty, with the percentage of repeat buyers falling significantly. An analyst described this drop as “unprecedented,” highlighting the significant challenges the company faces due to its CEO’s public persona.
The new shares will increase Musk’s ownership stake 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.
