In a controversial decision, Tesla’s board has approved a new $29 billion stock award for CEO Elon Musk, a move that is designed to replicate the terms of his 2018 pay package after a US court voided the original deal. The board’s special committee has framed the award as a “good faith” payment to honor the original agreement. Musk will pay $2 billion to acquire 96 million shares at the original 2018 price.
The decision was detailed in a shareholder letter from board members Robyn Denholm and Kathleen Wilson-Thompson. They acknowledged shareholder anxieties about Musk’s divided attention, citing his many other ventures and his increasing political involvement. The directors believe that the new award will “incentivise Elon to remain at Tesla” and ensure his focus on the company’s future.
Musk’s political activities have reportedly had a negative impact on the Tesla brand and customer loyalty. A survey from S&P Global Mobility showed a dramatic decline in the percentage of Tesla owners who bought another Tesla, a drop an analyst called “unprecedented.” This data suggests that Musk’s public image and political affiliations are directly affecting the company’s sales.
The new shares will increase Musk’s ownership stake from 13% to about 15%, giving him greater voting power. Musk has consistently argued that more control is necessary to protect the company from activist shareholders as it pivots its strategy toward AI and robotics. The board’s letter confirms that the award is designed to gradually increase his influence, cementing his leadership. The new compensation package will be forfeited if the original 2018 deal is reinstated.
Tesla’s Board Attempts to Recreate Musk’s 2018 Pay Deal with New $29B Grant
