Board’s Compromise: Tesla Awards Musk $29B in Hopes of Re-Focusing His Attention

In a significant corporate decision, Tesla’s board of directors has approved a new $29 billion stock award for CEO Elon Musk, a move that comes after a U.S. court invalidated his previous pay package. The board, in a letter to shareholders, openly acknowledged concerns about Musk’s divided attention and political activities, positioning the new award as a strategic solution to these problems. This “good faith” payment will allow Musk to purchase 96 million shares at the original 2018 price for $2 billion.
A special committee of the board, which included chair Robyn Denholm and director Kathleen Wilson-Thompson, recommended the package. They stated that the award is a “critical first step” toward “keeping Elon’s energies focused on Tesla.” The board’s hope is that this new compensation package will serve as a powerful incentive for Musk to remain with the company and secure his long-term commitment.
The company has faced mounting pressure, with reports suggesting that Musk’s political endorsements and his relationship with Donald Trump have hurt the Tesla brand and its sales. A survey from S&P Global Mobility showed a sharp decline in customer loyalty, with the percentage of repeat buyers falling significantly. An analyst described this drop as “unprecedented,” highlighting the significant challenges the company faces due to its CEO’s public persona.
The new shares will increase Musk’s ownership stake from 13% to approximately 15%, giving him greater voting power. Musk has long argued that more control is necessary to protect the company from activist shareholders as it pivots its strategy toward AI and robotics. The board’s letter confirms that the award is designed to gradually increase his influence, ensuring his leadership. This new compensation package will be forfeited if the original 2018 deal is reinstated.