Elon Musk Tesla granted shares to Elon Musk worth nearly $30 billion, the company said Monday, describing it as a “good faith” award to help retain the carmaker’s CEO after his previous multibillion-dollar pay package was struck down by a judge.
The company approved a grant of 96 million shares for Musk, which he could tap after two years of service in a “senior leadership role” at Tesla. The mercurial billionaire, whose business empire includes rockets, artificial intelligence, brain implants and more, hinted last month that he wanted more shares in Tesla, on top of his 13 per cent stake, to prevent his ouster by “activist” shareholders.
With the new shares, Musk would own nearly 16 per cent of Tesla, a stake that would be worth over $150 billion at the company’s stock price Monday.
The package amounts to an extraordinary pay raise for Musk as Tesla sales and profit are falling and the company is losing market share, in part because of his behavior. His involvement in right-wing politics has alienated many liberal car buyers who are more likely than conservatives to buy electric vehicles. Musk is already the world’s richest person, worth about $350 billion, according to Bloomberg.
The action by Tesla’s board of directors is likely to fuel criticism that the members, who include several close friends and his brother, are failing to act as a check on Musk. In a regulatory filing, the board did not impose any conditions besides the one about staying in a senior role. Typically, executive pay is tied to performance goals. The new award will be worth $27 billion to Musk after taking into account the money he will have to spend to acquire the shares.
Tesla also appears to be taking advantage of a decision last year to move its corporate domicile to Texas from Delaware, where a judge struck down his previous pay package. The company has appealed that decision and said Musk would not receive the second pay package if a higher court reinstates the original compensation plan.
To sue in Texas, shareholders must own at least 3 per cent of the company, a very high bar.
The board will ask shareholders to vote on a longer-term compensation plan at Tesla’s annual meeting in November, the letter said, suggesting that Musk’s pay would increase further.
A spokesperson for Tesla’s board did not respond to a request for comment.
