Tesla grants billionaire Elon Musk a massive reward a shared value worth $29 billion. The main aim of this reward was to continue to keep him in charge as the company shifts its focus from cars to robotaxis and humanoid robots.

According to electric car giants, the new deal is a sign of confidence in Musk’s leadership at a time when Tesla is facing falling sales, tough competition, and questions about the CEO’s political involvement and other business ventures.

The company described the “interim award” of the 96 million new shares as a first step, “good faith” payment to honour Musk’s more than $50 billion pay package from 2018 that was struck down by a Delaware court last year.

Musk can claim the new award if he remains in a top executive role for another two years and a court does not reinstate the 2018 package currently on appeal.

He must hold the shares for five years and can buy them for $23.34 per share, the same as the exercise price of the 2018 award. Tesla will also put to vote a longer-term CEO compensation plan at its annual investor meeting on November 6.

This strategy is meant to keep Musk, the public face of Tesla and architect of its robotaxi strategy, focused on the electric-vehicle maker as it navigates a shift to cybercabs and robotics from its mainstay auto business.

Despite vehicle lineup , including an aging vehicle line up and Musk’s controversial political endorsement that have impacted brand loyalty the board believes Musk is the best candidate to navigate Tesla’s future challenges. Company’s sales have been falling at the company due to its ageing vehicle line-up, tough competition and Musk’s right-wing political stances that have tarnished its brand.

According to S&P Global Mobility data shared with Reuters showed on Monday that Tesla’s brand loyalty had plunged since Musk endorsed US President Donald Trump last summer.

Musk’s involvement in politics and his wider business empire, including AI startup xAI, have also sparked concerns about his devotion to Tesla, the main source of his wealth. Musk has threatened to leave unless he gets more control over Tesla.

According to Reuters, the new stock award will take his Tesla stake, already the largest, to more than 15% from the 12.7% currently, calculations based on data compiled by LSEG.

Musk’s share ownership is set to increase from 12.7% to over 15%, solidifying his position as the largest shareholder. Prior to this grant, Musk had not received significant compensation since 2017, and the board aims to retain his “extraordinary talent” amid his various business pursuits.

Talent magnet

Tesla’s special committee led by chair Robyn Denholm and independent director Kathleen Wilson Thompson stated that while they acknowledge Elon Musk’s various business ventures and the extensive demand on this time, they believe that the new encourage award will make him stay with the company.

“While we recognise Elon’s business ventures, interests and other potential demands on his time and attention are extensive and wide-ranging we are confident this award will incentivise Elon to remain at Tesla,” said a special committee Tesla formed this year to consider Musk’s compensation. It consists of chair Robyn Denholm and independent director Kathleen Wilson-Thompson.

The company said it would not record compensation expense for the award as it does not currently expect the performance condition to be “probable of being met.” It will re-evaluate and recognise the expense if it determines the award is likely to be met, including after the two-year vesting period.

In the past, Tesla has indicated that a compensation package comparable to Musk’s 2018 plan could lead to an accounting charge exceeding $25billion. The newly announced plan is approximately one third the size of the previous package. But the prices of shares have been doubled since last year the potential cost remains significant.

A critic of Tesla Lawrence Fossi stated that “The compensation of Tesla here is going to be ferocious”.

The new shares will also be forfeited or offset if the Delaware courts fully reinstate the 2018 stock award, ensuring there is no “double dip,” the special committee said.

Investors and analysts welcomed the news, with Tesla shares rising nearly 2% in early trading. The stock has lost a quarter of its value this year, as of last close.

Camelthorn Investments adviser Shawn Campbell noted, “Under normal circumstances, a compensation package in the billions would raise some eyebrows.

Clearly, investors have benefited from Musk’s stewardship of Tesla. This stock grant will bind Musk to Tesla for the next two years.“

The ongoing legal battle regarding Musk’s previous pay package, which was deemed the largest in Corporate America, has highlighted flaws in the board’s approval process and raised concerns about fairness to investors. Musk filed an appeal in March, asserting that the lower court made multiple errors in voiding the compensation, which he argues led to significant growth for Tesla.

Tesla shares have skyrocketed nearly 2,000% over the past decade, far exceeding the S&P 500’s approximate 200% increase during the same period.

Charles Elson, founding director of the Weinberg Centre for Corporate Governance at the University of Delaware, criticized the new award as a mere repackaging of the previously ruled improper compensation plan, rendering the Delaware court’s decision “effectively meaningless.”

He added, “You don’t have to incentivize him to stay. If he leaves, he throws away 13% of the company, which is still a huge part of his net worth.”