In a controversial move, Tesla’s board of directors has approved a new $29 billion stock award for CEO Elon Musk, following the invalidation of his previous pay package by a U.S. court. The board, in a letter to shareholders, openly recognized concerns about Musk’s divided attention and his political activities, framing the new award as a strategic response to these issues. The award is being called a “good faith” payment, enabling Musk to buy 96 million shares at the original 2018 price for $2 billion.
The special committee, which included chair Robyn Denholm and director Kathleen Wilson-Thompson, recommended the new package, calling it a “critical first step” to “keeping Elon’s energies focused on Tesla.” The board’s hope is that this new compensation will act as a powerful incentive for Musk to remain dedicated to the company and secure his long-term commitment.
The company has faced growing backlash, with reports indicating that Musk’s political endorsements and his association with Donald Trump have negatively impacted the Tesla brand and its sales. A survey from S&P Global Mobility showed a dramatic decline in customer loyalty, with repeat buyers dropping significantly. An analyst described this fall as “unprecedented,” highlighting the significant challenges the company is facing due to its CEO’s public persona.
The new shares will boost Musk’s ownership stake from 13% to around 15%, granting him enhanced voting power. Musk has consistently argued that he needs more control to protect the company from activist shareholders as it pivots its strategy toward AI and robotics. The board’s letter supports this view, confirming that the award is designed to gradually increase his influence, solidifying his leadership. This new compensation package will be nullified if the original 2018 deal is reinstated.