Tesla awarded CEO Elon Musk shares worth $29 billion on Monday — part of a new pay deal aimed at keeping him at the helm during a crucial pivot. The company described the “interim award” of 96 million new shares as a first step, a “good faith” payment to honor Musk’s more than $50 billion pay package from 2018 that was struck down by a Delaware court last year.
Musk had earlier threatened to leave unless he got more control over Tesla.
The world’s richest man can claim the new award if he remains in a top executive role for another two years and a court does not reinstate a 2018 package currently on appeal. The new shares will also be forfeited or offset if the Delaware courts fully reinstate the 2018 stock award, ensuring there is no “double dip”.
Tesla moves to retain Musk
He has to hold the shares for five years and can buy them for $23.34 per share, the same as the exercise price of the 2018 award. Tesla will also put to vote a longer-term CEO compensation plan at its annual investor meeting on November 6. The move is meant to keep Musk, the public face of Tesla and architect of its robotaxi strategy, focused on the electric-vehicle maker as it navigates a shift to cybercabs and robotics from its mainstay auto business. It also seems to quell any speculation that the board’s patience with Musk could be wearing thin because of the recent tumultuous months, including the CEO’s foray into politics.
Musk had previously alarmed investors with his growing involvement in politics and a wider business empire. The move to give him greater control of the company however, suggests that directors still see him as best-suited to tackle the growing list of challenges ahead of Tesla. Sales have been falling at the company in recent months due to its aging vehicle line-up and tough competition. The company has also been affected by Musk’s right-wing political stances over the past year.
What is the net worth of Elon Musk?
According to the real-time Forbes billionaire list, Musk is the richest person in the world with a net worth of $401.2 billion. The award on Monday will not have an immediate impact on his liquid wealth because he will have to pay Tesla $23.34 per share (the same price as the 2018 package) to vest these new shares. The $29 billion payout is also contingent on the Tesla CEO staying with the company and the ongoing court decision.
Musk owns approximately 13% of outstanding Tesla shares (approximately 410 million) with a current valuation of $90 billion. The 96 million restricted shares — valued at about $29 billion — represent roughly 3% additional potential ownership if they are fully vested and exercised.
(With inputs from agencies)