Tesla’s board of directors has approved a new $29 billion stock award for CEO Elon Musk, a move designed to secure his leadership after a US court voided his 2018 pay package. The board, through a special committee, has framed the decision as a “good faith” payment to “honour the bargain that was struck in 2018.” Musk will pay $2 billion for 96 million shares at the original 2018 price, a compensation structure that has been a source of significant debate.
In a letter to shareholders, board members Robyn Denholm and Kathleen Wilson-Thompson acknowledged the ongoing concerns about Musk’s divided attention due to his many other ventures, including SpaceX, X, and xAI. They also noted the potential for his political activities to detract from his focus on Tesla. The new award, they wrote, is a “critical first step” toward ensuring that his “energies” remain with the electric car company.
Musk’s political activities have reportedly had a negative impact on the Tesla brand, particularly among left-leaning buyers. A survey from S&P Global Mobility showed a dramatic and “unprecedented” drop in customer loyalty, with the percentage of repeat buyers falling sharply before a slight rebound. This data suggests that Musk’s public image is having a tangible effect on sales, adding to the challenges posed by increased competition in the EV market.
The new shares will increase Musk’s ownership stake to approximately 15%, up from 13%, giving him greater voting power. This is a key demand from Musk, who has argued that more control is necessary to protect the company from activist shareholders as it pivots its focus toward AI and robotics. The board’s letter confirms that the award is intended to gradually increase his influence, ensuring his long-term commitment. The new award will be forfeited if the original 2018 deal is reinstated.
Tesla Board Attempts to Cement Musk’s Leadership with $29B Stock Grant
