Tesla’s board of directors has taken action to “honour the bargain that was struck in 2018” by approving a new $29 billion stock award for CEO Elon Musk. This decision follows a US court’s invalidation of his previous $56 billion pay package. The new award, described as a “good faith” payment, allows Musk to purchase 96 million shares at the original 2018 price for $2 billion.
The decision was made by a special committee of the board and was communicated to shareholders in a letter from chair Robyn Denholm and director Kathleen Wilson-Thompson. They acknowledged the widespread concerns about Musk’s divided attention due to his many other ventures and political activities. The directors stated that the new award is a “critical first step” toward “keeping Elon’s energies focused on Tesla.”
Musk’s political endorsements and his relationship with Donald Trump have reportedly damaged the Tesla brand and customer loyalty. An S&P Global Mobility survey showed a sharp and “unprecedented” decline in the percentage of Tesla owners who bought another Tesla, a trend that highlights the challenges the company faces beyond just market competition.
The new shares will increase Musk’s ownership stake from 13% to about 15%, giving him greater control. Musk has consistently argued that more voting power is necessary to protect the company from activist shareholders as it shifts its focus to AI and robotics. The board’s letter confirms that the award is designed to gradually increase his influence, cementing his long-term leadership. This new compensation package will be forfeited if the original 2018 deal is reinstated.