Tesla’s board of directors has awarded CEO Elon Musk a new compensation package worth $29 billion, which they are calling a “good faith” payment. This decision follows a US court’s invalidation of the original 2018 pay deal, which was valued at $56 billion. The new package allows Musk to purchase 96 million shares at the original 2018 price, for which he will pay $2 billion.
The move was recommended by a special committee of the board and detailed in a letter to shareholders from Robyn Denholm and Kathleen Wilson-Thompson. The directors explicitly stated their intention to “honour the bargain that was struck in 2018” and to recognize the value Musk has created for the company. They also addressed concerns about his various other business ventures and political activities, framing the new award as a way to “keep Elon’s energies focused on Tesla.”
Musk’s involvement in politics, including his support for Donald Trump, has reportedly caused a decline in brand loyalty and sales. A survey from S&P Global Mobility revealed a steep drop in customer loyalty, with the percentage of Tesla owners buying another Tesla plummeting from 73% to just under 50% in a few months. While the rate has since recovered slightly, an analyst described the decline as “unprecedented,” indicating the significant impact of Musk’s public image on the company.
The new shares will increase Musk’s ownership stake from 13% to about 15%, granting him greater control. Musk has publicly stated that more voting power is essential to protect Tesla from activist shareholders as it transitions its business model toward AI and robotics. The board’s letter supports this view, noting that the award is designed to gradually increase his influence and secure his long-term commitment. This new compensation package will be forfeited if the original 2018 deal is reinstated by the courts.
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