Tesla’s board of directors has approved a new stock award for CEO Elon Musk valued at $29 billion. This action comes after a US court struck down his previous $56 billion pay package from 2018. Musk will purchase 96 million shares at the original 2018 price, a move that the board’s special committee views as a way to honor the original agreement and keep Musk engaged with the company. The CEO will pay $2 billion for the stock.
The board’s decision was communicated in a letter to shareholders from chair Robyn Denholm and director Kathleen Wilson-Thompson. They stated that the award is a “good faith” payment to recognize Musk’s “extraordinary value” to the company. The directors also directly addressed shareholder worries about Musk’s divided attention, citing his multiple businesses and political activities. They hope this new incentive will be a “critical first step” toward ensuring his focus remains on Tesla.
The fallout from Musk’s political endorsements and his relationship with Donald Trump has reportedly hurt the Tesla brand. According to a survey by S&P Global Mobility, customer loyalty experienced an “unprecedented” decline, with the percentage of Tesla owners who bought another Tesla falling significantly. This drop, while partially recovering, shows the tangible impact of Musk’s public actions on the company’s sales and brand perception.
With the new shares, Musk’s ownership stake will increase from 13% to approximately 15%, giving him more control. Musk has long advocated for more voting power to prevent being ousted by “activist shareholders” as Tesla shifts its focus to AI, robotics, and robotaxis. The board’s letter indicates that this award is designed to gradually increase his influence, securing his leadership for the company’s future. The new package is conditional on the original 2018 deal not being reinstated.