Friends,
Tesla announced today that it’s granting additional shares to Elon Musk, worth around $29 billion. Tesla’s board describes it as a “first step, ‘good faith’ payment” to Musk — even as Tesla continues to battle in court over reinstating an even bigger pay package that a Delaware judge struck down.
Why is this giant pay package necessary, you might ask, when Musk already holds 13 percent of the company, worth hundreds of billions?
It’s not as if Tesla is thriving and Musk has contributed to its profitability. In fact, Tesla’s sales and profit are falling and it’s losing market share. Tesla’s stock is now down about 20 percent for the year. The company hasn’t reported an increase in quarterly earnings since the third quarter of 2024.
Tesla’s downward profit spiral is mainly due to Musk’s involvement in right-wing politics, which has alienated many car buyers. Although Musk has officially left the Trump administration, he is still nosing around politics. He’s even talking about starting a third party.
And let’s be clear: His political power comes directly from his wealth. Teslas’s making him $29 billion wealthier arguably makes American politics $29 billion dirtier.
It’s not as if Musk needs the additional money. He’s already the world’s richest person, worth about $350 billion.
So why is Tesla’s board giving him a $29 billion raise?
Because Musk hinted last month that he wanted more shares in Tesla to prevent his ouster by “activist” shareholders. It was a “major concern,” he said on an earnings call with analysts.
But this excuse begs the question of why activist shareholders would want him ousted if he were doing such a good job at Tesla. The answer is he’s obviously not doing a good job and he knows it.
Tesla’s board of directors aren’t exerting better control over Musk because the board is packed with Musk’s close friends and his brother. This is called a conflict of interest, people.
In fact, what Musk is doing to Tesla is a smaller version of what Trump is doing to America — fleecing it while running it into the ground.
And Tesla’s board’s response is a miniature version of the way congressional Republicans are responding to Trump — rubber stamping whatever he wants.
Many Tesla shareholders, meanwhile, resemble Trump’s MAGA base. They’ve made a cult out of Musk and applaud anything that keeps him at Tesla despite his breathtakingly irresponsible performance as CEO.
Call it authoritarian capitalism.
This post has been syndicated from Robert Reich, where it was published under this address.