In a significant move, Tesla’s board of directors has approved a new $29 billion stock award for CEO Elon Musk. This decision follows a U.S. court’s invalidation of his prior pay package. In a letter to shareholders, the board openly acknowledged concerns about Musk’s political activities and divided focus, positioning the new award as a strategic solution. The award, a “good faith” payment, allows Musk to purchase 96 million shares at the original 2018 price for $2 billion.
A special committee, including chair Robyn Denholm and director Kathleen Wilson-Thompson, recommended the package. They described it as a “critical first step” to “keeping Elon’s energies focused on Tesla.” The board’s hope is that this new compensation will serve as a powerful incentive for Musk to remain with the company and secure his long-term commitment.
The company’s brand has reportedly suffered, with reports suggesting that Musk’s political endorsements and his connection to Donald Trump have negatively impacted Tesla’s sales and reputation. A survey by S&P Global Mobility indicated a stark drop in customer loyalty, with the number of repeat buyers falling sharply. An analyst characterized the decline as “unprecedented,” pointing to the major challenges the company faces due to its CEO’s public behavior.
The new stock will boost Musk’s ownership stake from 13% to roughly 15%, giving him more voting power. Musk has consistently argued that he requires greater control to safeguard the company from activist shareholders as it pivots its strategy toward AI and robotics. The board’s letter confirms that the award is intended to gradually increase his influence, ensuring his leadership. The new compensation package will be canceled if the original 2018 deal is reinstated.