Tesla’s board of directors has approved a new $29 billion stock award for CEO Elon Musk, a move they say is meant to “honour the bargain that was struck in 2018” after a US court invalidated his previous pay deal. The award, described as a “good faith” payment, allows Musk to purchase 96 million shares at the 2018 price for $2 billion.
The decision, made by a special committee of the board, was communicated to shareholders in a letter from chair Robyn Denholm and director Kathleen Wilson-Thompson. They addressed shareholder concerns about Musk’s divided attention, noting his numerous business ventures and political activities. The directors believe that this new compensation package will “incentivise Elon to remain at Tesla” and keep his focus on the company.
Musk’s political endorsements and his public relationship with Donald Trump have reportedly damaged the Tesla brand and led to a drop in customer loyalty. A survey from S&P Global Mobility revealed a steep decline in the percentage of Tesla owners who bought another Tesla, with an analyst calling the drop “unprecedented.” This data shows the tangible impact of Musk’s public persona on the company’s business performance.
The new shares will increase Musk’s ownership stake from 13% to approximately 15%, giving him greater control. Musk has long argued that more voting power is necessary to protect the company from activist shareholders as it shifts its focus toward AI and robotics. The board’s letter confirms that the award is designed to gradually increase his influence, cementing his leadership. This new package will be forfeited if the original 2018 pay deal is reinstated.
