- Tesla’s board agreed on a $29 billion compensation plan for Elon Musk to assure his leadership for Tesla’s transition to AI and robotics.
- Tesla’s customer loyalty, which plummeted following Elon Musk’s political activities, has since rebounded to a level above the industry average.
- Elon Musk has been working without a pay package since his $50 billion option award was struck down by a U.S. court in 2018.
Tesla’s board has approved a compensation package worth $29 billion to secure his undivided commitment as the firm navigates its critical pivot from an electric vehicle manufacturer to a leader in artificial intelligence and robotics.
The company shares gained more than 2% in trading after the announcement, in the initial market reaction. Tesla claims Musk has provided “extraordinary value” to shareholders but has not been compensated in years since his 2018 pay deal worth $50 billion was overturned by a Delaware court last year. The new compensation package grants Musk 96 million shares at an exercise price of $23.34 per share, currently valued at $29 billion according to the current market prices.
According to S&P Global Mobility data exclusively reported by Reuters, showed that Tesla’s customer loyalty was 73% in June 2024 across all 50 states. However, by July, Tesla customer loyalty started declining due to Musk’s public endorsement of U.S. President Donald Trump. The customer loyalty further plunged to 49.9% by March, following Musk’s role in the formation of the Department of Government Efficiency. As of May, the loyalty rate has returned to 57.4%, bringing it back above the industry average in par with Toyota but behind Chevrolet and Ford.
Board members have openly raised worries about his time being split between multiple businesses, including SpaceX and the AI startup xAI. In a public filing, a special committee expressed confidence that the reward and increased voting power will “incentivize Musk to remain at Tesla” during what it described as an urgent and non-guaranteed strategic transition.
Ultimately, Tesla’s $29 billion compensation plan is about establishing leadership for a high-stakes future. As the firm shifts its attention from low-cost EVs to capital-intensive industries like autonomous driving and robotics, the board has determined that Musk’s singular focus is the most important asset of all. Tesla is already preparing to launch its Robotaxi service in New York City, with new job postings in Brooklyn signaling a major expansion into the challenging urban environment.
