Tesla’s board has approved a $29 billion equity award for CEO Elon Musk, a move designed to reaffirm his commitment to the company following a court decision that voided his previous 2018 compensation package.
The new arrangement allows Musk to acquire 96 million Tesla shares at a pre-set price, the same strike price as the now-contested 2018 deal. This decision follows months of uncertainty after a Delaware judge invalidated the original $56 billion agreement in early 2024.
Tesla stated that the current package was recommended by a special committee of its board, formed to address shareholder concerns and reinforce Musk’s role in the company’s strategic direction.
Context Behind the Decision
In a letter to shareholders, Tesla board chair Robyn Denholm and director Kathleen Wilson-Thompson emphasized the board’s belief in honoring the “spirit” of the original 2018 deal. They cited investor feedback, including communications on social platform X (owned by Musk), as instrumental in forming their decision.
“To recognize what Elon has accomplished and the extraordinary value he delivered to Tesla and our shareholders, we believe we must take action to honor the bargain that was struck in 2018,” the letter stated. “After all, a deal is a deal.”
The directors also acknowledged ongoing concerns about Musk’s diversified business interests. Beyond Tesla, Musk is at the helm of SpaceX, X (formerly Twitter), xAI, and Neuralink. These overlapping responsibilities have raised investor concerns about his focus on Tesla’s future, particularly as the company navigates a complex EV landscape, increasing AI integration, and evolving global politics.
Political Headwinds and Market Impact
Tesla has faced growing scrutiny over Musk’s involvement in U.S. political affairs, including a controversial alliance with former President Donald Trump. Analysts have noted that Musk’s political positions have affected Tesla’s brand image and consumer sentiment, particularly among progressive buyers.
Recent research from S&P Global Mobility highlighted a decline in customer loyalty, with repeat Tesla purchases falling sharply from 73% in mid-2024 to just under 50% earlier this year — before rebounding slightly in May.
Despite these challenges, Dan Ives of Wedbush Securities described the new share award as a positive step that eliminates an overhang on Tesla stock and reinforces Musk’s integral role. “Musk remains Tesla’s big asset,” Ives noted.
Looking Ahead: Tesla Beyond Automobiles
Tesla’s strategic evolution continues to accelerate. The company is pivoting toward advanced technologies, including autonomous mobility and robotics. Musk has made clear that Tesla’s long-term vision is centered around AI-driven solutions like robotaxis and humanoid robots — signaling a transition from automotive manufacturer to a broader tech and robotics firm.
This latest equity award is expected to raise Musk’s ownership stake in Tesla from 13% to approximately 15%, enhancing his voting power and influence over the company’s trajectory.
While the compensation plan still faces legal complexities, Tesla’s board expressed confidence that this move would help maintain leadership stability.
“While we recognize Elon’s business ventures and broad interests, we are confident this award will incentivize him to remain focused on Tesla,” the board wrote.
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IMAGE: Bloomberg
