Tesla has given the billionaire Elon Musk a massive reward, a package of shares worth $ 29 billion, in a movement to keep it firmly in charge as the company changes its approach to cars to robotaxis and humanoid robots.
The electric car giant has said that the New Deal is a sample of confidence in Musk’s leadership at a time when Tesla faces a fall in sales, a tough competition and questions about the political participation of the CEO and other commercial companies.
The company described the “interim prize” of the 96 million new shares as first step, payment of “good faith” to honor the payment package of more than $ 50 billion 2018 that was attacked by a court in Delaware last year.
Musk can claim the new award if he remains at a high -level executive position for another two years and a court does not restore the 2018 package currently under appeal.
You have to keep the shares for five years and you can buy them for $ 23.34 per share, as well as the exercise price of the 2018 Prize. Tesla will also present a longer -term CEO compensation plan at its annual meeting of investors on November 6.
The movement is intended to keep Musk, the public face of Tesla and the architect of its Robotaxi strategy, focused on the manufacturer of electric vehicles as it navigates a change to cybercaz and robotics of its main automatic business.
It also seems to suffocate any speculation that the patience of the Board with musk could be worn due to the recent tumultuous months, including the incursion of the CEO in politics.
The movement to give Musk greater control of the company suggests that the directors still see it as more appropriate to face the growing list of Tesla challenges in the coming years.
Sales have been falling into the company due to their aging of the alignment of vehicles, the tough competition and the political postures of the Musk right that have fogged their brand.
The Global S&P mobility data shared exclusively with Reuters showed on Monday that the loyalty of the Tesla brand had collapsed since Musk supported the president of the United States, Donald Trump, last summer.
Musk’s participation in politics and its broader commercial empire, including the startup of the XAI, have also caused concerns about their devotion to Tesla, the main source of its wealth. Musk has threatened to leave unless he gets more control over Tesla.
The new Award of Actions will carry its participation as Tesla, and the largest, to more than 15% of 12.7%, according to the calculations of data based on data compiled by LSE.
Before Monday’s subsidy, Musk did not have an active compensation plan and Tesla said he had not received a significant salary since 2017. With the legal fight for its 2018 package that is expected to continue, the Board said it moved to retain the “extraordinary talent” of Musk.
Talent magnet
“While we recognize Elon’s commercial companies, interest and other possible demands about their time and attention are extensive and broad … We are sure that this award will encourage Elon to remain in Tesla,” said a special committee that Tesla formed this year to consider Musk’s compensation. It consists of President Robyn Denholm and independent director Kathleen Wilson-Thompson.
The company said it would not register compensation expenses for the prize, since it does not currently expect the performance status to be “probable to be fulfilled.” It will reassess and recognize the expense if it determines that the prize is likely to be met, even after the two -year acquisition period.
Last year, the company said that a new compensation package for Musk along with the 2018 Plan would result in an accounting charge of more than $ 25 billion. Although the plan presented on Monday is approximately one third of the size of the 2018 plan, the price of shares has almost doubled in the last year, increasing the potential cost.
“The compensation expense to Tesla will be fierce here,” said Lawrence Fossi, who publishes a critical Bulletin from Tesla.
The new actions will also be lost or compensate if the Delaware courts completely restore the award of shares of 2018, ensuring that there is no “double immersion,” said the special committee.
Investors and analysts welcomed the news, and Tesla’s shares increased almost 2% in the first operations. The action has lost a quarter of its value this year, until the last closure.
“In normal circumstances, a compensation package in thousands of millions would raise some eyebrows. (But) investors have benefited from the Tesla Musk administration,” said Camelthorn Advisor Investments Shawn Campbell, owner of Tesla Shares. “This subsidy of shares will unite Tesla to Musk for the next two years.”
Battle for payment
The Delaware ruling in the 2018 Musk Payment Package, the largest in corporate America, had cited failures in the process of approval of the Board and injustice for investors. Musk initiated an appeal against the order in March, claiming that a judge of the lower court made multiple legal errors to terminate record compensation.
He has argued that the package resulted in a spectacular growth for Tesla and yet was determined by the Lower Court of Foreign Ministry to be unfair to the shareholders, who voted twice to approve the plan.
Tesla shares have increased almost 2,000% in the last decade, far exceeding around 200% in the S&P 500 reference index in the same period.
“This is simply a repaired version of what was done years ago and was declared inappropriate by a judge. It makes the decision of the Delaware court effectively meaningless,” said Charles Elson, founding director of the Weinberg Corporate Governance Center at the University of Delaware.
“He does not have to encourage him to stay. If he leaves, he throws 13% of the company, which remains a large part of his net assets,” said Elson, who had filed Amaicus reports that support the decision of the Court to cancel Musk’s 2018 prize.
