Tesla Awards Elon Musk $29 Billion in Shares as CEO Resists Threat to Leave

Strategic Insights -

Tesla has approved the award of 96 million restricted shares to its CEO, Elon Musk, worth $29 billion, in an effort to retain him after a previous multibillion-dollar package was blocked by the courts. The special committee composed of Robyn Denholm and Kathleen Wilson-Thompson agreed on the interim award, designed to incrementally increase Musk's voting rights and incentivize him to stay with the company. The award comes as Tesla faces a slowdown in sales, rising competition, and cuts in US government support for electric vehicles.

Key Takeaways:

  • The Tesla board has approved an interim award of 96 million restricted shares to Elon Musk, worth $29 billion, to retain him as CEO.
  • The special committee composed of Robyn Denholm and Kathleen Wilson-Thompson agreed on the award to increase Musk's voting rights and incentivize him to stay with the company.
  • The award is contingent on Musk remaining in a key executive role through 2027 and comes with a five-year holding period, except for tax payments or the $23.34-a-share purchase price.
  • The interim award is designed to provide incremental increases to Musk's voting rights, which he and shareholders have consistently considered crucial for his focus on Tesla.
  • The award is part of a larger effort to address concerns regarding Musk's compensation package, which was deemed "excessive" by a Delaware judge last December.
  • Tesla shares rose $6.63, or 2.2 per cent, to close at $309.26 in New York, valuing the business at $998 billion.

Statistics:

  • 96 million restricted shares awarded to Elon Musk, worth $29 billion.
  • $23.34 per share of restricted stock that vests, which is equal to the exercise price per share of the 2018 award.
  • Tesla shares rose 2.2 per cent to close at $309.26 in New York, valuing the business at $998 billion.
  • Musk's previous compensation package was worth $56 billion, deemed "excessive" by a Delaware judge last December.
  • 2018: Year in which Musk's $56 billion compensation package was implemented.
  • 2027: Year in which Musk must remain in a key executive role to vest the interim award shares.

Sources:

  • Robyn Denholm and Kathleen Wilson-Thompson quoted from a letter to shareholders, citing Bloomberg on 2023-02-13.
  • Tesla's filing, mentioning the Court of Chancery and Kathaleen McCormick's ruling on 2022-12.
  • Richard Tornetta's lawsuit against Elon Musk, which led to the original compensation package being deemed excessive by a Delaware judge.
  • Tesla's statement on its filing, citing a high-profile fallout between President Trump and Musk.
  • Cuts in US government support for electric vehicles, affecting Tesla's sales and competitiveness.