Tesla proposes giving Elon Musk $29 billion so he stays CEO
Tesla approved a restricted stock award of 96 million shares, worth about $29 billion, to “incentivize” the controversial billionaire to remain at the head of the company during a protracted legal battle over his original pay package.
Last year, a Delaware court voided Musk’s pay package, valued at more than $50 billion, arguing that the deal was flawed and unfair to shareholders and that Musk held undue influence over its composition. Shareholders had voted twice to approve the hefty compensation, but the judge still upheld her ruling blocking it. Tesla has appealed the decision to the Delaware Supreme Court.
Now, the company is asking shareholders to approve this new award, arguing that Tesla is on the cusp of becoming a leader in AI and robotics, requiring Musk’s steady hand on the helm. To be sure, Tesla’s position is shakier than ever. Musk’s support for President Donald Trump and his work at the Department of Government Efficiency to fire tens of thousands of federal workers and cancel humanitarian aide programs has spawned a nationwide protest movement and a steep drop in sales. Tesla’s stock has shed more than 20 percent of its value so far this year.
Still, Tesla’s board sees Musk’s continued involvement as essential to the company’s future. Earlier this year, Tesla’s board created a special committee compromised of board chair Robyn Denholm and board member Kathleen Wilson-Thompson to consider new ways to compensate Musk, who the board claims “has not received meaningful compensation for eight years.”
“While we recognize that Elon’s business ventures, interests and other potential demands on his time and attention are extensive and wide-ranging … we are confident that this award will incentivize Elon to remain at Tesla and focus his unmatched leadership abilities on further creating shareholder value for Tesla shareholders and attracting and retaining talent at Tesla,” Denholm and Wilson-Thompson wrote in a letter to shareholders.
The board noted that if the Delaware courts fully reinstate Musk’s 2018 pay package, the new interim grant would be forfeited or offset so there is “no double dip.” In accepting the new stock, Musk would agree to serve as head of Tesla until 2027. Shareholders will vote on the new deal at their annual meeting, which is scheduled for November 6th.
After years of exponential growth, the sudden reversal in Tesla’s fortune has left many investors and supporters with whiplash. As Musk slid deeper into politics, investors have urged him to stay focused on Tesla and its costly — and questionable — project to build more self-driving cars and humanoid robots. The company rolled out its first robotaxi service in Austin, Texas, last month — although the service fell short of Musk’s earlier predictions. The company’s only new product since 2020, the Cybertruck, has widely been considered a flop. And competition from legacy automakers, especially those in China, has been sapping Tesla’s resources.
Musk is currently Tesla’s largest shareholder, with a 13 percent stake in the company. But the CEO has said he wants more control over the company in order to have more sway over its mission — which this plans aims to produce.
“That is a major concern for me, as I’ve mentioned in the past, and I hope that is addressed at the upcoming shareholders meeting,” Musk said in a recent earnings call, in response to a question about his voting stake. “I want to find that I’ve got so little control that I can easily be ousted by activist shareholders after having built this army of humanoid robots … I’ve mentioned before, I think my control of Tesla should be enough to ensure that it goes in a good direction, but not so much control that I can’t be thrown out if I go crazy.”