The board of directors at Tesla has made a bold move, awarding CEO Elon Musk a new compensation package worth $29 billion in shares. This action is a direct response to a US court’s decision to invalidate the original $56 billion pay deal from 2018. In a letter to shareholders, the board’s special committee, represented by Robyn Denholm and Kathleen Wilson-Thompson, described the award as a “good faith” payment to recognize Musk’s achievements and ensure his continued dedication. Musk will pay $2 billion to acquire 96 million shares at the original 2018 price.
The directors were candid about addressing shareholder anxieties regarding Musk’s various other commitments. They acknowledged reviewing investor feedback, including posts on X, the social media platform owned by Musk, and emphasized that the new award is a strategic effort to “keep Elon’s energies focused on Tesla.” This comes amid concerns that his leadership is divided between SpaceX, X, xAI, and Neuralink, among other ventures.
Musk’s increasing involvement in politics, particularly his alignment with Donald Trump, has led to a backlash that has impacted Tesla’s brand and sales. An S&P Global Mobility survey revealed a sharp drop in customer loyalty, with the percentage of repeat Tesla buyers falling from 73% to 49.9% in a matter of months. This “unprecedented” decline, as described by an analyst, highlights the challenges the company faces beyond just market competition.
The new share award will boost Musk’s ownership stake from 13% to about 15%, giving him more control over the company. Musk has consistently argued that greater voting power is necessary to protect Tesla from activist shareholders as it pivots its strategy toward robotaxis and humanoid robots. The board’s letter confirms that the award is designed to achieve this goal, securing his leadership as the company transforms into an AI and robotics firm. This package is dependent on the original 2018 deal not being reinstated.