A new chapter in Elon Musk’s compensation saga has begun, with Tesla’s board of directors approving a new $29 billion stock award for the CEO. This decision comes after a US court voided his previous $56 billion pay package from 2018. The award, a “good faith” payment, allows Musk to purchase 96 million shares at the original 2018 price for $2 billion.
In a letter to shareholders, board members Robyn Denholm and Kathleen Wilson-Thompson acknowledged concerns about Musk’s time being divided among his many ventures and his political activities. They stated that the new award is a “critical first step” toward “keeping Elon’s energies focused on Tesla” and securing his long-term commitment.
Musk’s political endorsements and his relationship with Donald Trump have reportedly had a negative impact on the Tesla brand and customer loyalty. A survey from S&P Global Mobility showed a dramatic and “unprecedented” drop 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, ensuring his leadership. The new compensation package will be forfeited if the original 2018 deal is reinstated.