Tesla’s board of directors has approved a new $29 billion stock award for CEO Elon Musk, a move that reinforces their commitment to his leadership after a US court voided his previous compensation package. The decision, based on a recommendation from a special committee, is a “good faith” effort to “honour the bargain that was struck in 2018.” Musk will pay $2 billion to acquire 96 million shares at the original 2018 price.
In a letter to shareholders, board members Robyn Denholm and Kathleen Wilson-Thompson addressed the widespread concerns about Musk’s divided attention. They acknowledged his multiple ventures and political activities, stating that the new award is a strategic move to “keep Elon’s energies focused on Tesla.” They believe this financial incentive will secure his long-term commitment to the company.
Musk’s political endorsements and his relationship with Donald Trump have reportedly hurt the company’s brand and sales. A survey from S&P Global Mobility showed a sharp decline in customer loyalty, with the percentage of repeat Tesla buyers falling significantly. An analyst described this drop as “unprecedented,” highlighting the challenges the company faces as a result of its CEO’s public persona.
The new shares will increase Musk’s ownership stake from 13% to approximately 15%, granting him more voting power. Musk has consistently argued that greater control is necessary to protect Tesla 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, ensuring his leadership as the company transforms. The new compensation package will be forfeited if the original 2018 deal is reinstated.