New stock grant aims to secure Musk’s commitment as legal battle over $56 billion 2018 pay package continues
Tesla’s (TSLA) board has approved a nearly $30 billion alternative compensation plan for CEO Elon Musk, seeking to ensure his continued focus on the company amid an ongoing court dispute over his invalidated $56 billion 2018 pay package.
The new plan, valued at $29.1 billion as of Friday’s market close, must still receive shareholder approval. It offers Musk 96 million Tesla shares at $23.34 each, contingent upon his continuous service until August 3, 2027, in key executive roles. A five-year holding period applies to the shares, except for tax or purchase price obligations.
If the Delaware Supreme Court reverses the Chancery Court’s decision voiding the 2018 agreement, shares issued under the new plan would be forfeited. The court has not yet set a date for ruling on the case, which questions whether shareholder approval can override judicial review in corporate governance.
Tesla’s original 2018 plan tied Musk’s compensation to strict market capitalization, revenue, and profit milestones, all of which were met by late 2021. However, a Delaware judge voided the agreement citing conflicts of interest among board members and inadequate disclosures about their relationships with Musk.
The alternative compensation plan comes at a time when Tesla faces sales pressure and increasing competition in electric vehicles and AI-powered technologies. Tesla reported a 12% year-over-year revenue decline in Q2, missing analyst expectations.
Wedbush analyst Dan Ives called the move a strategic step to keep Musk committed, noting that competition for AI talent is intensifying. “Musk remains Tesla’s biggest asset,” Ives said, adding that the new grant could keep him at the company until at least 2030.
Shareholders are expected to vote on the proposal in the coming months.
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