Tesla’s CEO Elon Musk has been rewarded with a substantial restricted stock package worth approximately $29 billion in shares to retain him as the head of the company. This move comes after Musk’s 2018 pay package was rejected by a Delaware Chancery Court, leading him to question his future at Tesla. The Special Committee of the Tesla Board approved this package unanimously, aiming to retain Musk for several years.
On Monday morning, Tesla announced that a Special Committee, consisting of Board Chair Robyn Denholm and board member Kathleen Wilson-Thompson, recommended compensating Musk for his exceptional work and contributions to the company. The post stated that Tesla is committed to honoring its promises in the 2018 CEO Performance Award and intends to compensate Musk for his future services commensurate with his contributions.
The award includes 96 million restricted shares of stock, subject to a two-year vesting term and a purchase price equal to the split-adjusted exercise price of the stock options awarded to Musk under the 2018 CEO Performance Award. Musk must serve continuously in a senior leadership role at Tesla during the vesting term, with a pledging allowance to cover tax payments or the purchase price. Additionally, there is a mandatory holding period of five years from the grant date, with any sales for tax payments or purchase price to be conducted through an orderly disposition in coordination with Tesla.
The Board emphasized that this award recognizes the extraordinary value Musk has created for Tesla shareholders and is a crucial step in retaining him as the CEO. Musk and his brother Kimbal, who are both members of the Tesla board, recused themselves from voting on this pay package.
This move comes as Musk has expressed concerns about his control of the company and potential activist shareholders. With a current stake of about 12.8 percent in Tesla, Musk has indicated that he would be more comfortable with a 25 percent stake to protect himself against activist shareholders.
The pay package should alleviate any concerns about Musk’s role as CEO and ensure consistent progress on various projects, including AI and Robotics. Retaining Musk at the helm of Tesla is vital for the company’s future success and innovation in the automotive and technology sectors.