Elon Musk, CEO of SpaceX and Tesla and owner of X, gestures as he attends the Viva Technology conference dedicated to innovation and startups at the Porte de Versailles exhibition center in Paris.
Tesla gave Elon Musk a stock grant of $29 billion on Monday as a reward for years of "transformative and unprecedented" growth despite a recent foray into right-wing politics that has hurt its sales, profits and its stock price.
In giving its billionaire CEO 96 million in restricted shares, the electric car company noted that Musk hasn't been paid in years because his 2018 compensation package has been rejected by a Delaware court. The award comes eight months after a judge revoked the 2018 pay package a second time. Tesla has appealed the ruling.
Tesla on Monday called the grant a "first step, good faith" way of retaining Musk and keeping him focused, citing his leadership of SpaceX, xAI and other companies. Musk said recently that he needed more shares and control so he couldn't be ousted by shareholder activists.
"Rewarding Elon for what he has done and continues to do for Tesla is the right thing to do," the company said in a regulatory filing, citing an increase of $735 billion in Tesla's value on the stock market since 2018.
Tesla shares have plunged 25% this year largely due to blowback over Musk's affiliation with President Donald Trump. But Tesla also faces intensifying competition from both the big Detroit automakers, and from China.
In its most recent quarter, Tesla reported that quarterly profits plunged from $1.39 billion to $409 million. Revenue also fell and the company fell short of even the lowered expectations on Wall Street.
Investors have grown increasingly worried about the trajectory of the company after Musk had spent so much time in Washington this year, becoming one of the most prominent officials in the Trump administration in its bid to slash the size of the U.S. government.
The electric vehicle maker said in the regulatory filing that Musk must first pay Tesla $23.34 per share of restricted stock that vests, which is equal to the exercise price per share of the 2018 pay package.
In December Delaware Chancellor Kathleen St. Jude McCormick reaffirmed her earlier ruling that Tesla must revoke Musk's multibillion-dollar pay package. She found that Musk engineered the landmark pay package in sham negotiations with directors who were not independent.
Recommended for you
The rulings came in a lawsuit filed by a Tesla stockholder who challenged Musk's 2018 compensation package.
That pay package carried a potential maximum value of about $56 billion, but that sum has fluctuated over the years based on Tesla's stock price.
Musk appealed the order in March. A month later Tesla said in a regulatory filing that it was creating a special committee to look at Musk's compensation as CEO.
Musk has been one of the richest people in the world for several years.
Wedbush analyst Dan Ives feels Musk's stock award may alleviate some Tesla shareholder concerns.
"We believe this grant will now keep Musk as CEO of Tesla at least until 2030 and removes an overhang on the stock," Ives wrote in a client note. "Musk remains Tesla's big asset and this comp issue has been a constant concern of shareholders once the Delaware soap opera began."
Under pressure from shareholders last month, Tesla scheduled an annual shareholders meeting for November to comply with Texas state law.
A group of more than 20 Tesla shareholders, which have watched Tesla shares plummet, said in a letter to the company that it needed to at least provide public notice of the annual meeting.
Keep the discussion civilized. Absolutely NO
personal attacks or insults directed toward writers, nor others who
make comments. Keep it clean. Please avoid obscene, vulgar, lewd,
racist or sexually-oriented language. Don't threaten. Threats of harming another
person will not be tolerated. Be truthful. Don't knowingly lie about anyone
or anything. Be proactive. Use the 'Report' link on
each comment to let us know of abusive posts. PLEASE TURN OFF YOUR CAPS LOCK. Anyone violating these rules will be issued a
warning. After the warning, comment privileges can be
revoked.
Please purchase a Premium Subscription to continue reading.
To continue, please log in, or sign up for a new account.
We offer one free story view per month. If you register for an account, you will get two additional story views. After those three total views, we ask that you support us with a subscription.
A subscription to our digital content is so much more than just access to our valuable content. It means you’re helping to support a local community institution that has, from its very start, supported the betterment of our society. Thank you very much!
(0) comments
Welcome to the discussion.
Log In
Keep the discussion civilized. Absolutely NO personal attacks or insults directed toward writers, nor others who make comments.
Keep it clean. Please avoid obscene, vulgar, lewd, racist or sexually-oriented language.
Don't threaten. Threats of harming another person will not be tolerated.
Be truthful. Don't knowingly lie about anyone or anything.
Be proactive. Use the 'Report' link on each comment to let us know of abusive posts.
PLEASE TURN OFF YOUR CAPS LOCK.
Anyone violating these rules will be issued a warning. After the warning, comment privileges can be revoked.