Tesla grants Musk US$29 billion in shares to keep him at helm
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The news: Tesla granted CEO Elon Musk an interim stock award worth about USD29 billion ($44.9 billion) as a “good faith” payment while legal efforts continue to reinstate his voided 2018 compensation plan.
The numbers: The award includes 96 million shares with an exercise price of USD23.34 and will vest only if Musk remains in a key executive role through 2027.
The shares must also be held for five years from the grant date. The company's board said the decision was aimed at retaining Musk "against the backdrop of the ever-intensifying AI talent war and Tesla’s position at a critical inflection point."
If the 2018 award is fully reinstated, the new one will be forfeited or offset to prevent a “double dip.”
The headline value is based on Tesla’s Friday’s closing price of USD302.63 multiplied by the 96 million shares granted, but Musk must pay USD23.34 per share to exercise the award, or USD2.24 billion in total, meaning the actual value would be lower.
Tesla shares rose as much as 3.1% on Monday morning.
The context: After a Delaware court voided Musk’s 2018 compensation package, citing flaws in the board’s approval process and unfairness to investors, Tesla reincorporated in Texas, with Musk citing the court decision as part of the reason for leaving Delaware.
A special board committee, made up of chair Robyn Denholm and director Kathleen Wilson-Thompson, had been exploring ways to offer Musk a new compensation agreement governed by Texas law.
The company is at what the board called a “critical inflection point” as it shifts focus from electric vehicles to AI and robotics, while facing falling sales, growing competition and political backlash linked to Musk’s endorsement of Donald Trump and formation of a new political party.
What they said: “While we recognize that Elon’s business ventures, interests and other potential demands on his time and attention are extensive and wide-ranging, including his leadership roles at xAI, SpaceX, Neuralink, X Corp and the Boring Co as well as his other interests, we are confident that this award will incentivize Elon to remain at Tesla,” the board said in its letter.
“To be clear, losing Elon would not only mean the loss of his talents but also the loss of a leader who is a magnet for hiring and retaining talent at Tesla.”
The sources: Tesla SEC filing, Tesla post
