Tesla’s $29 Billion Deal with Elon Musk to Guarantee His Focus

While Elon Musk’s staggering $56 billion compensation plan is stalled in the courts, he’s received a significant consolation prize. Tesla’s board has just awarded him a new stock package valued at $29 billion to ensure he “keeps his focus on Tesla.”

A Temporary Plan While Waiting for Legal Resolution

This new compensation plan comes as a direct result of a Delaware court blocking his previous package, awarded in 2018, which is still under appeal. Tesla has decided to implement a “temporary” solution in the interim.

The automaker has granted its CEO 96 million new shares, which he can access provided he remains in his role for at least two more years. Should the courts eventually uphold the original $56 billion plan, this new package would then be nullified.

A Response to Departure Threats

This move is also a way for the board to respond to Musk’s demands. Earlier in the year, he had publicly threatened to take his future AI and robotics projects outside of Tesla if he did not receive a larger stake in the company, around 25%.

The new agreement, which increases his stake from 13% to nearly 16%, is thus an attempt to placate him and ensure that the CEO does not abandon the company or, at least, that he does not walk away with its most promising projects.

Challenging Timing

This astronomical reward is announced at a time when Tesla is going through a rough patch. Sales have declined for the second consecutive quarter, fierce competition from Chinese rivals persists, and the company’s stock has fallen 25% since the start of the year. Musk’s political antics have also tarnished the brand’s image among some of its traditional customer base.

What’s the Buzz?

This development is yet another demonstration of Elon Musk’s complete control over his board. Offering one of the largest compensations in history to a CEO whose company is struggling is highly unusual and shows that the board is willing to do whatever it takes to keep him on board.

Curiously for shareholders, this package comes with no performance conditions attached. Musk only needs to stay in his position for two years. It’s essentially a blank check that also endorses his new strategy of shifting towards robotaxis, an expensive venture with uncertain profitability. The board seems to be giving him full control of the steering wheel, even as the vehicle is slowing down. And what do you think, does Elon Musk deserve such a bonus despite Tesla’s current difficulties?

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