Tesla Awards Musk Stock Package Valued at $29 Billion
Tesla has awarded CEO Elon Musk a new stock package worth approximately $29 billion, just six months after a Delaware court ordered the company to revoke his previous multibillion-dollar compensation plan.
According to a regulatory filing released on Monday, Musk is being granted 96 million restricted shares, though he must first pay Tesla $23.34 per share, the same exercise price as the 2018 package that was struck down by a court ruling earlier this year.
In that ruling, Delaware Chancellor Kathaleen St. Jude McCormick determined that the original $56 billion compensation plan was the result of sham negotiations between Musk and non-independent Tesla board members. She also denied a massive fee request by plaintiff attorneys, awarding them $345 million instead of the $5 billion in Tesla stock they had sought.
The decision came after a Tesla shareholder challenged Musk’s 2018 pay deal. While Musk appealed the ruling in March, Tesla announced a month later that it had formed a special committee to re-evaluate his compensation.
Dan Ives, an analyst with Wedbush, said the new stock grant could help ease shareholder anxieties. “We believe this grant will now keep Musk as CEO of Tesla at least until 2030 and removes an overhang on the stock,” he said. “Musk remains Tesla’s big asset and this comp issue has been a constant concern of shareholders once the Delaware soap opera began.”
Tesla stock has fallen 25% this year, due in part to concerns over Musk’s close ties with President Donald Trump and his growing presence in Washington, where he has emerged as a key figure in the administration’s efforts to reduce the size of the US government.
The electric vehicle maker is also facing stiff competition from US automakers and Chinese rivals. In its most recent quarterly report, Tesla posted a sharp drop in profits down from $1.39 billion to $409 million along with falling revenue and results that missed Wall Street’s already lowered expectations.
Under shareholder pressure, Tesla has scheduled an annual meeting for November, in compliance with Texas state law. More than 20 investors, concerned about the company’s direction, had earlier written to the board demanding that the meeting be formally announced.
Tesla’s shares were up more than 2% in pre-market trading.
Faridah Abdulkadiri
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