Tesla’s board of directors has given the green light to 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 elephant in the room: concerns about Musk’s divided attention and political activities. They are presenting the new award as a solution to these problems. This “good faith” payment allows Musk to acquire 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 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 serve as a powerful incentive for Musk to stay at the company and secure his long-term commitment.
The company has been grappling with brand-related issues. Reports suggest that Musk’s political endorsements and his relationship with Donald Trump have harmed the Tesla brand and its 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 the decline as “unprecedented,” underscoring the challenges caused by the CEO’s public image.
The new shares will increase Musk’s ownership stake from 13% to approximately 15%, giving him greater voting power. Musk has long advocated for more control, claiming it 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, ensuring his continued leadership. This new compensation package will be forfeited if the original 2018 deal is reinstated.