Elon Musk purchased Tesla shares worth $1 billion last week — days after the company proposed a trillion-dollar payout for its CEO. The purchase came even as Tesla Chair Robyn Denholm insisted that the billionaire was “front and center” at the company after several months at the White House. Tesla shares jumped 7.4% before the start of regular trading on Monday — putting the stock on track to erase a year-to-date decline.
According to reports citing a regulatory filing, Musk bought about $1 billion in Tesla shares through a trust on September 12. The purchase of 2.57 million shares was the first open market transaction made by Musk since February 2020. The company had previously approved the conditional awarding of 96 million new shares as part of a compensation package last month. The billionaire businessman is also on track to receive the largest corporate pay package in history after Tesla proposed a $1 trillion compensation plan with certain caveats.
Musk had sparked investor concerns after foraying into politics and later challenging President Donald Trump — with many flagging potential distractions and hurt sales as alienated buyers chose rival EVs. Denholm has however dismissed concerns that his political activity depressed sales and insisted last week that the billionaire was “front and center” at Tesla after several months at the White House. The recent developments also underscore the continued hold Musk has over the carmaker as it attempts to transform into an AI and robotics powerhouse.
The purchase on Friday is being widely perceived as a strong vote of confidence in the company and a reaffirmation of his commitment to Tesla. The acquisition also gives Musk greater control over the direction Tesla will take in the coming years and increases his voting rights stake.
Tesla chair says political activities ‘up to Musk’
Tesla board chair Robyn Denholm dismissed concerns that Elon Musk’s political activity had depressed sales at the electric-vehicle maker during an interview on Friday. The longtime board member also offered an emphatic endorsement of Musk and acknowledged the possibility of the CEO moving into another leadership post such as chief product officer.
“He is a generational leader. There aren’t any other people out there like Elon who can actually lead the company over the next decade or so…What he does from a personal perspective in terms of his political motivations is up to him. From a politics perspective, obviously we’re in a democracy, so everyone gets to voice their points of view,” he told Bloomberg Television.
Trillion-dollar payout for Musk?
Musk could become the first trillionaire in the world if he manages to hit several aggressive targets for Tesla over the next decade. The company said in a regulatory filing earlier this month that it would hand the CEO shares worth as much as 12% of the company in a dozen separate packages if the company meets certain performance targets. This includes massive increases in car production, share price and operating profit.
If approved by shareholders, the new pay package would mark a new level of outsized pay in a country already known for extreme compensation. But the payoff is in shares, not cash, and the goals are extreme as well. To get his first package of shares equivalent to 1% of the company, Musk would have to convince investors in the stock market that Tesla is worth $2 trillion in total, double what they value it today, and also hit several other milestones. To receive all the shares offered and make him the world’s first trillion-dollar man would require that market value to then rise to $8.5 trillion, double that of the world’s most valuable company now, chipmaker Nvidia.
(With inputs from agencies)