Tesla’s board of directors has approved a new $29 billion stock award for CEO Elon Musk, a move they say is designed to keep the billionaire’s attention on the company’s mission. The award serves as a “good faith” replacement for a previous $56 billion pay package that was voided by a US court. Musk will purchase 96 million shares at the 2018 price for $2 billion, effectively mirroring the terms of the original deal.
This decision follows a recommendation from a “special committee” of the board and was accompanied by a shareholder letter from chair Robyn Denholm and director Kathleen Wilson-Thompson. They admitted to reviewing shareholder concerns, including those voiced on Musk’s social media platform X, regarding his divided focus. The directors believe that the new compensation package will “incentivize Elon to remain at Tesla” and ensure his considerable “energies” are directed at the electric carmaker.
Musk’s extensive portfolio of companies, including SpaceX, X, xAI, and Neuralink, has been a source of anxiety for many investors. Furthermore, his increasing involvement in US politics and a strained relationship with Donald Trump have reportedly damaged the Tesla brand. An S&P Global Mobility survey highlighted a dramatic decline in customer loyalty, which one analyst called “unprecedented,” with the rate of repeat Tesla purchases falling sharply before a slight recovery.
The new share award will increase Musk’s ownership stake from 13% to approximately 15%. This bolstered control is crucial, according to Musk, to protect the company from activist shareholders and to allow him to steer Tesla towards its new focus on artificial intelligence, robotics, and robotaxis. The board’s letter explicitly states that this award is a “critical first step” toward securing Musk’s long-term commitment. This new package will be canceled if the courts reinstate the original 2018 deal.