In a controversial move, the Tesla board has granted CEO Elon Musk a new share award valued at $29 billion, aiming to replicate the terms of his 2018 compensation plan that was recently struck down by a court. The board’s special committee, led by Robyn Denholm and Kathleen Wilson-Thompson, justified the decision as a way to “honour the bargain that was struck in 2018,” despite a Delaware court rescinding the original $56 billion deal. Musk will pay $2 billion to purchase 96 million shares at the 2018 price.
The directors, in their letter to shareholders, openly addressed the public’s concerns about Musk’s divided attention. They noted that their decision was influenced by shareholder communications, including posts on X, which highlighted worries about his focus. The board members framed the new award as a strategic move to “incentivise Elon to remain at Tesla” and keep his “energies focused” on the company. This comes amid his increasing involvement in ventures like SpaceX and xAI, as well as his foray into polarizing politics.
The political fallout from Musk’s relationship with Donald Trump has had a tangible impact on Tesla’s brand and sales. A recent S&P Global Mobility survey revealed a sharp decline in customer loyalty, a trend described by one analyst as “unprecedented.” The loyalty rate, which measures how many Tesla owners purchase another Tesla, plummeted from 73% to 49.9% in a matter of months, before partially recovering. This data underscores the challenges the company faces, with competition in the electric vehicle market also a contributing factor.
By increasing his stake from 13% to 15%, Musk will gain greater control over the company. He has publicly stated that he needs more voting power to prevent being pushed out by activist shareholders, especially as Tesla pivots its business model towards robotaxis and humanoid robots. The board’s new compensation plan is designed to incrementally boost his influence, securing his long-term commitment to the company’s ambitious, AI-driven future. The new award is contingent on the original 2018 pay package not being reinstated.