Tesla has rewarded Elon Musk with a stock grant valued at approximately $AU44.79 billion ($US29 billion), recognising his significant contributions to the company amidst recent challenges. The electric vehicle manufacturer granted Musk 96 million restricted shares, highlighting that he has not received a salary for several years due to a Delaware court ruling that annulled his 2018 compensation package.
This stock award comes eight months after a judge repealed Musk’s pay package for a second time, a decision Tesla is currently appealing. The company asserts that this grant is a proactive measure to retain Musk’s focus and retain him as CEO, given his leadership roles in other ventures such as SpaceX and xAI.
Musk has expressed a need for increased control within the company, citing concerns over activist shareholders potentially attempting to remove him from leadership. Tesla’s regulatory filing supports this payout, citing a staggering increase of $US735 billion in the company’s market value since 2018, as justification for rewarding Musk.
Despite these numbers, Tesla’s stock has experienced a 25% decline this year, largely attributed to backlash stemming from Musk’s political affiliations with former President Donald Trump, coupled with increasing competition from established automotive giants and Chinese manufacturers. The most recent quarterly earnings report showed a sharp drop in profits, falling from $US1.39 billion to $US409 million, further exacerbated by revenue declines that missed Wall Street’s adjusted expectations.
Concerns among investors have escalated regarding Tesla’s future, particularly given Musk’s heightened visibility in Washington and his involvement with Trump’s administration. The regulatory filing notes that Musk must first pay Tesla $US23.34 for each share of restricted stock before it vests, mirroring the exercise price set in his original pay package.
Earlier this year, the Delaware Chancellor ruled that Musk’s previous exorbitant compensation plan was based on disingenuous negotiations with non-independent board members. This ruling followed a lawsuit from a Tesla shareholder challenging Musk’s 2018 pay structure, which could have reached a maximum value of around $US56 billion, contingent on Tesla’s fluctuating stock price.
Musk’s appeal against this decision remains ongoing, and the company has initiated a special committee to reassess his compensation as CEO. Analysts believe that this recent stock grant could alleviate some investor apprehension, enhancing Musk’s position as CEO until at least 2030. Observers acknowledge that Musk continues to serve as Tesla’s most valuable asset, with the ongoing compensation saga being a concern for shareholders.
Amid mounting pressure for transparency, Tesla has announced an annual shareholders meeting scheduled for November, adhering to Texas state law, in response to requests from over 20 shareholders voicing concerns about the company’s declining stock value.