Tesla has awarded Elon Musk a $29 billion stock grant in response to his transformative leadership, despite recent controversies affecting the company’s performance.
Tesla Inc. presented an extensive stock grant to its CEO and leader, Elon Musk, on Monday, valued at a striking $29 billion. This award acknowledges Musk’s impactful role in the substantial growth of the electric vehicle company, though recent political controversies have negatively influenced the company’s market performance.
The substantial grant comprises 96 million in restricted shares, marking the first payment Musk has received in years after his 2018 compensation package was invalidated by a Delaware court. This latest reward follows a court decision that once again nullified Musk’s previous compensation package just eight months ago. Tesla is contesting the ruling on appeal.
In its public statement, Tesla described the grant as a “first step, good faith” initiative to ensure Musk’s continued leadership. The company emphasized his significant contributions not only to Tesla but also through his roles with SpaceX, xAI, and other ventures. Recently, Musk has expressed a need for increased shares and control to shield himself from confrontations with shareholder activists.
Acknowledging Musk’s contributions, the company highlighted a $735 billion increase in Tesla’s market value since 2018. However, this year, Tesla’s stock has faced a 25% decline, primarily attributed to backlash over Musk’s affiliations with former President Donald Trump, in addition to rising competition from traditional and Chinese automakers.
In a challenging financial quarter, Tesla reported a significant drop in profits, from $1.39 billion to $409 million, coupled with reduced revenue that fell short of even lowered Wall Street expectations.
Investors have expressed increasing concern regarding Tesla’s current direction, especially as Musk has been heavily engaged in political activities in Washington, D.C., aligning with the Trump administration’s efforts to reduce the size of the U.S. government.
In the regulatory filing, Tesla specified that Musk is obliged first to pay the company $23.34 per share of the restricted stock when it vests, aligning with the exercise price per share set in his 2018 compensation package.
The compensation controversy stems from a lawsuit filed by a Tesla stockholder, who contested the legitimacy of Musk’s 2018 pay package, which could potentially reach a maximum value of $56 billion depending on the company’s stock performance. Delaware Chancellor Kathleen St. Jude McCormick reaffirmed her decision to revoke Musk’s previous compensation package, which she claimed was a result of misleading negotiations with non-independent directors.
Musk, one of the world’s wealthiest individuals, appealed the court’s decision in March. Subsequently, in April, Tesla announced plans to form a special committee to reassess his compensation as CEO.
Wedbush Securities analyst Dan Ives commented that the new stock grant might help to ease some of the anxiety among Tesla shareholders. “We believe this grant will now keep Musk as CEO of Tesla at least until 2030 and removes an overhang on the stock,” Ives stated in a client note. “Musk remains Tesla’s big asset and this compensation issue has been a constant concern of shareholders once the Delaware soap opera began.”
Recently, Tesla scheduled an annual shareholders meeting for November to comply with Texas state regulations, following pressure from over 20 Tesla shareholders. These shareholders have witnessed a dramatic decline in Tesla’s stock value and requested public notification of the upcoming annual meeting.
Despite the company’s operational challenges, Tesla experienced nearly a 2% rise in its stock during midday trading on Monday, according to Associated Press.