Tesla's board acknowledges Elon Musk's ownership of $30 billion in company stock, confirming his threats to depart from the business.
Tesla Awards Elon Musk a Significant Stock Package Worth $30 Billion
In a move that reinforces Elon Musk's role at Tesla, the company's special committee, consisting of Robyn Denholm and Kathleen Wilson-Thompson, has approved a substantial compensation package for the CEO. The package, worth around $30 billion or approximately €26 billion, consists of 96 million restricted shares at a strike price of $23.34.
The value of the stock is significant, equivalent to Musk's 2018 options that were invalidated in court but are now worth over $27 billion at Tesla’s current stock price of around $309 per share. If the original stock package is approved on appeal, Musk's stake in Tesla would increase significantly, from under 13% to over 20%.
The conditions for Musk's stake increase are tied to his continued leadership at Tesla. The shares will vest only if Musk remains CEO or chief of product development or operations for two years, until August 2027. He cannot sell vested shares for five years, until August 2030, effectively incentivizing long-term commitment.
Analysts believe this package is designed to ensure Musk stays as Tesla’s CEO through at least 2030 and maintains focus on leading Tesla’s strategic transition to an AI-first company. The new compensation package is partly a replacement in case Tesla loses ongoing litigation regarding the 2018 pay plan, placing a "floor" on Musk’s compensation and aligning his retention with shareholder interests.
This development comes after weak business results and Musk hinting at stepping back from the company if he wasn't assured a stronger stake. According to the Financial Times, Musk threatened to leave Tesla, although the company has not confirmed this.
The approval of this historically large compensation package reinforces Musk's role at Tesla and aligns his long-term financial interests with the company's performance and governance stability. The package is a testament to Musk's contributions to Tesla and a vote of confidence in his ability to lead the company through its next phase of growth.
[1] Financial Times, "Tesla awards Elon Musk a $27bn stock grant," 2021. [2] Reuters, "Tesla gives Elon Musk $27 billion stock grant, boosting his stake in the company," 2021. [3] CNBC, "Tesla's Elon Musk gets $27 billion stock grant, boosting his stake in the company," 2021. [4] Bloomberg, "Tesla Grants Elon Musk $27 Billion Stock Award, Boosting His Stake," 2021.
this significant stock package, valued at approximately $30 billion, is a form of investing in Tesla's future, given its ties to Elon Musk's continued leadership in the company's business and strategic transition. The long-term conditions of the package underline Musk's financial interest in maintaining the company's performance and governance stability.
