In an effort to keep Elon Musk firmly in charge, Tesla has granted him a new stock award worth $29 billion. This compensation is being presented as a “good faith” payment after a Delaware court invalidated his previous $50 billion pay package from 2018.
The company’s board has stated that this “interim award,” consisting of 96 million new shares, is a crucial step to retain Musk’s leadership as Tesla shifts its primary focus from electric cars to robotaxis and humanoid robots. The award is contingent on Musk remaining in a top executive role for another two years, and he must hold the shares for five years after acquiring them at the 2018 exercise price of $23.34 per share.
This decision comes at a challenging time for Tesla, which is facing declining sales, stiff competition, and concerns over Musk’s political involvement and time spent on other ventures, such as his AI startup xAI. The company’s brand loyalty has reportedly plunged since Musk publicly endorsed Donald Trump. However, Tesla’s directors believe Musk is still the best person to lead the company and see this new compensation as a way to keep him focused.
The new stock package would increase Musk’s stake in Tesla from 12.7% to more than 15%, solidifying his control. Tesla will also put a longer-term CEO compensation plan to a vote at its annual investor meeting on November 6. If the Delaware court’s decision on the 2018 package is reinstated on appeal, this new award would be forfeited to prevent a “double dip.”
Critics of the new plan argue that it effectively undermines the Delaware court’s ruling and that Musk, as a major shareholder, already has enough incentive to stay. However, some investors and analysts have welcomed the news, believing the compensation is a necessary step to ensure Musk’s commitment to Tesla’s ambitious future.
