Elon Musk receives 96 million Tesla shares, worth approximately $30 billion.
Tesla Awards Elon Musk $29 Billion in Shares to Secure Leadership
Tesla has granted CEO Elon Musk a new compensation package worth approximately $29 billion, consisting of 96 million restricted shares of Tesla stock. This package, known as the "CEO Interim Award," is designed to incentivize and retain Musk amid intense competition for AI talent and to secure his continued leadership at Tesla.
The shares will vest over a two-year term, contingent on Musk serving continuously in a senior leadership role during this period. The value of the shares is based on Tesla’s stock price performance, with Musk eligible to receive shares if the company’s market value hits certain milestones.
This new package replaces Musk’s 2018 pay arrangement, which was worth about $46.8 billion but was invalidated by a Delaware judge after a shareholder lawsuit. Musk and Tesla are currently appealing that ruling.
By tying Musk’s compensation to a leadership role, the package ensures he remains at Tesla in a strategic capacity, maintaining his influence on company decisions and direction. Receiving a substantial block of restricted shares likely reinforces his significant voting power within the company, intertwining the interests of Musk and Tesla shareholders more closely.
Tesla’s board highlighted Musk’s unique combination of leadership, technical expertise, and a proven track record, emphasizing the package’s necessity given the "ever-intensifying AI talent war" marked by aggressive acquisitions and compensation offers for AI talent.
The special committee on Tesla’s board is considering the compensation matters involving Musk. The award comes amid Tesla’s transition from an affordable EV platform to robotaxis and humanoid robots.
The court ruling on Musk’s original pay deal is still under appeal. Tesla shares rose more than 2% in premarket trading following the announcement of the award. However, the special committee did not disclose the exact number of shares Musk received in the latest award.
Musk must pay Tesla $23.34 per share of restricted stock that vests, equal to the exercise price per share of the 2018 CEO Award. The award is part of a strategy to keep Musk focused on Tesla’s mission, as both he and shareholders have consistently emphasized the importance of his continued involvement.
In conclusion, Musk’s new compensation plan not only grants him substantial equity compensation but also strengthens his ongoing leadership role and maintains his considerable voting influence within Tesla.
- The substantial equity compensation granted to Elon Musk, valued at $29 billion, demonstrates Tesla's commitment to their business growth, as well as their reliance on technology and finance to maintain their competitive edge in the AI talent market.
- Elon Musk's continuous tenure as a senior leader at Tesla, ensured by the 96 million shares package award, signifies his integral role in the company's technology-driven business model, particularly during their transition into robotaxis and humanoid robots.
