Tesla’s board has approved a new $29 billion stock award for CEO Elon Musk, a move that will increase his ownership stake from 13% to about 15%. This decision follows a US court’s voiding of his previous $56 billion pay package from 2018. The award, recommended by a special committee of the board, is viewed as a “good faith” payment to honor the original agreement. Musk will pay $2 billion for 96 million shares at the 2018 price.
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, including SpaceX, X, and xAI. They stated that the new award is a “critical first step” toward “keeping Elon’s energies focused on Tesla,” hoping to secure his long-term commitment as the company pivots toward an AI-driven future.
Musk’s political activities have reportedly had a negative impact on the Tesla brand, leading to a significant drop in customer loyalty. A survey from S&P Global Mobility showed an “unprecedented” decline in the percentage of Tesla owners who bought another Tesla, falling from 73% to just under 50% in a few months. This data highlights the challenges the company faces, with its CEO’s public image directly affecting sales and brand perception.
The increase in voting power is a key demand from Musk, who has argued that greater control is necessary to protect the company from activist shareholders. The board’s letter confirms that the award is designed to gradually increase his influence, ensuring his leadership as Tesla transitions into an AI and robotics firm. The new compensation package will be forfeited if the original 2018 deal is reinstated.
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