In a move that points to Tesla's shifting trajectory, CEO Elon Musk has been granted stock shares reportedly valued at about $29 billion. As per a regulatory filing today, these shares mark yet another enormous payout for Musk, albeit a contentious one. Following a Delaware court ruling last year that negated Musk's whopper of a pay package from 2018 over board approval process issues, Tesla has now awarded its CEO with 96 million new shares, as noted by the Associated Press.
By rewarding Musk, whose stake in Tesla stands at a considerable 13%, the company aims to ensure his leadership during a time when its core auto business seems to dwindle. Furthermore, the share award intends to increase Musk's voting power, often deemed crucial to his continued focus on Tesla's mission. A special committee, formed by Tesla earlier this year, which consists of chair Robyn Denholm and independent director Kathleen Wilson-Thompson, is behind this decision. "While we recognize Elon's business ventures, interests and other potential demands on his time and attention are extensive and wide-ranging... we are confident this award will incentivize Elon to remain at Tesla," the committee elucidated in the filing, as reported by Reuters.
However, not everyone views this latest payout positively. Charles Elson, founding director of the Weinberg Center for Corporate Governance at the University of Delaware, has criticized the move. "This is simply a repackaged version of what was done years ago and was ruled improper by a judge," Elson told Reuters, adding, "It renders the Delaware court decision effectively meaningless."
The backdrop for this latest largesse is one of challenges and a shifting landscape for Tesla. The automaker's brand loyalty has taken a hit, as S&P Global Mobility data suggests. Meanwhile, Tesla's share price has felt the pinch, dropping around 25% this year, which has not gone unnoticed by shareholders or industry analysts. Further pressure mounts from a sales decline, tough competition, and a controversial political stance taken by Musk, stirring a mix of setbacks that analysts fear could signify a "few rough quarters" ahead, according to an interview Musk gave during last month's earnings call, as mentioned by Reuters.
With all eyes on November 6, when these new compensation plans will be put to vote at Tesla's annual investor meeting, the company hopes to pivot toward a future marked by AI, robotaxis, and humanoid robots.
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