Tesla’s board of directors has approved a new $29 billion stock award for CEO Elon Musk, a move they say is a “good faith” payment to fulfill the promise of his 2018 pay deal, which was recently voided by a court. Musk will pay $2 billion to acquire 96 million shares at the original 2018 price, a fraction of their current value.
The decision was recommended by a special committee of the board, and communicated in a shareholder letter from chair Robyn Denholm and director Kathleen Wilson-Thompson. They acknowledged the widespread concerns among investors about Musk’s divided attention due to his numerous other ventures and political activities. The directors stated that the new award is a “critical first step” toward “keeping Elon’s energies focused on Tesla.”
Musk’s political endorsements and his relationship with Donald Trump have reportedly damaged 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, highlighting the challenges the company faces as a result of its CEO’s public persona.
The new shares will increase Musk’s ownership stake from 13% to about 15%, giving him greater control. Musk has long 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, cementing his leadership. This new compensation package will be forfeited if the original 2018 deal is reinstated.