Tesla gave billionaire Elon Musk a massive reward – a set of actions worth $ 29 billion – in a decision to keep it firmly in charge while the company goes to the objective of cars with robotaxis and humanoid robots.
The electric car giant said the New Deal is a demonstration of confidence in Musk leadership at a time when Tesla faces a decrease in sales, difficult competition and questions about the political involvement of the CEO and other companies.
The company has described the “temporary price” of the 96 million new shares as a first step, a payment of “good faith” to honor the salary package of more than $ 50 billion in Musk of 2018, which was canceled by a court of Delaware last year.
Musk can claim the new prize if he remains in a leading executive role for another two years and that a court does not restore the 2018 package currently on appeal.
He must hold the shares for five years and can buy them for $ 23.34 per share, the same as the 2018 price exercise price. Tesla will also vote a longer -term CEO remuneration plan at his annual investor meeting on November 6.
This decision aims to keep Musk, the public face of Tesla and the architect of its Robotaxi strategy, focused on the manufacturer of electric vehicles while sailing a passage to cybercabs and robotics of its pillar automotive activity.
He also seems to repress any speculation that the patience of the board of directors with Musk could be thin due to the tumultuous recent months, including the foray of the CEO in politics.
The decision to give Musk a greater control of the company suggests that the directors always consider it as best suited to meet the growing list of Tesla’s challenges in the years to come.
Sales have dropped in the company because of its aging range of vehicles, its difficult competition and the right -wing political positions of Musk who tarnished his brand.
Data on global mobility of S&P shared exclusively with Reuters showed on Monday that the loyalty to Tesla brand had plunged since Musk approved US President Donald Trump last summer.
Musk’s involvement in politics and its broader commercial empire, including the IA startup, XAI, also aroused concerns about its devotion to Tesla, the main source of its wealth. Musk threatened to leave unless he no longer obtains control over Tesla.
The new scholarship will take its Tesla participation, already the most important, more than 15% compared to the 12.7% currently, according to the reuters calculations based on the data compiled by LSEG.
Before the subsidy on Monday, Musk had no active remuneration plan and Tesla said that he had not received a significant salary since 2017. With the legal fight on his 2018 package which should continue, the Council said that it had moved to preserve Musk’s “extraordinary talent”.
Talented magnet
“Although we recognize Elon’s commercial companies, interests and other potential requests for his time and attention are extended and varied … We are convinced that the price will encourage Elon to stay in Tesla,” said a special committee that Tesla has formed this year to consider the remuneration of Musk. It consists of the president Robyn Denholm and the independent director Kathleen Wilson-Thompson.
The company said that it would not record remuneration fees for the sentence because it does not currently expect the performance condition to be “likely to be respected”. He will reassess and recognize expenses if it determines that the price is likely to be completed, including after the two -year acquisition period.
Last year, the Company said that a new remuneration package for Musk tied with the 2018 plan would cause an accounting charge of more than $ 25 billion. Although the plan unveiled on Monday is about a third of the size of the 2018 plan, the course of action has almost doubled in the past year, increasing the potential cost.
“The remuneration expenditure in Tesla here will be fierce,” said Lawrence Fossi, who publishes a critical newsletter of Tesla.
The new actions will also be confiscated or compensated if the courts of Delaware fully reintegrates the 2018 stock price, ensuring that there is no “double decrease”, said the Special Committee.
Investors and analysts welcomed the news, Tesla shares increasing by almost 2% at the start of negotiations. The stock has lost a quarter of its value this year at the end.
“In normal circumstances, a set of remuneration in billions would increase certain eyebrows. (But) investors have clearly benefited from the management of Musk de Tesla,” said Camelthorn Investments advisor Shawn Campbell, owner of Tesla shares. “This action grant will link Musk to Tesla for the next two years.”
Fight for remuneration
The decision of Delaware on the Musk 2018 remuneration package, the most important of American companies, had cited faults in the process of approval of the board of directors and injustice to investors. Musk appealed against the ordinance in March, claiming that a lower judge made several legal errors to cancel the compensation for records.
He argued that the package led to spectacular growth for Tesla and was nevertheless determined by the lower court of the Chancellery to be unfair to the shareholders, who voted twice to approve the plan.
Tesla shares have increased by almost 2,000% over the past decade, by far the increase of approximately 200% of the S&P 500 reference index during the same period.
“This is simply a reconditioned version of what was done years ago and was deemed inappropriate by a judge. He made the decision of the Court of Delaware actually devoid of meaning,” said Charles Elson, founding director of the Weinberg Center for Corporate Governance of the University of Delaware.
“You don’t have to encourage him to stay. If he leaves, he throws 13% of the company, which is still part of its net value,” said Elson, who had filed friendships supporting the court’s decision to cancel the 2018 Musk Prize.
