New York: Tesla has granted CEO Elon Musk a new $29 billion share award after a court voided his previous $50 billion compensation package, citing unfairness to shareholders. The move aims to retain Musk's leadership role amid strategic shifts toward AI and robotics, declining sales, and rising competition in the electric vehicle market. Tesla has granted 96 million new shares worth about $29 billion to CEO Elon Musk, a move aimed at keeping the billionaire entrepreneur at the helm as he fights a court ruling that voided his original pay deal for being unfair to shareholders.
According to France24.com, in 2024, a Delaware court voided Musk's 2018 compensation package, valued at over $50 billion, citing that the Tesla board's approval process was flawed and unfair to shareholders. Musk initiated an appeal in March against the order, claiming a lower court judge made multiple legal errors in rescinding the record compensation. Earlier this year, Tesla announced that its board had formed a special committee to consider some compensation matters involving Musk, without disclosing details.
Tesla further stated that if the Delaware courts fully reinstate the 2018 CEO Performance Award, the new interim grant will either be forfeited or offset, ensuring there will be no "double dip." The interim award shares vest only if Musk remains in a key executive role through 2027 and come with a five-year holding period, except to cover tax payments or the purchase price. Musk is required to pay Tesla $23.34 per share of restricted stock that vests, which matches the exercise price per share of the 2018 CEO Award, the company detailed in Monday's filing.
Tesla shares witnessed a rise of more than 2% in premarket trading. This comes as the stock has lost about a quarter of its value this year, attributed to the company grappling with declining sales due to its aging vehicle lineup, increased competition, and Musk's political stances that have alienated some potential buyers.
Musk, the chief executive of SpaceX and Tesla and the owner of X, formerly Twitter, has been actively involved in political activities. He has reportedly donated $118 million to his personal pro-Trump political action committee, an organization collecting funds for elections. Musk has also appeared alongside Trump at a campaign rally in Pennsylvania and hosted multiple town halls in the battleground state, seen as crucial for the November election.
The Wall Street Journal reported contacts between Musk and Russian President Vladimir Putin, though the Kremlin has denied these claims. NASA Administrator Bill Nelson expressed concern over the potential national security implications if the report were accurate, given Musk's involvement with SpaceX, which launches rockets for NASA and the Pentagon. Musk categorically denied any terminals being sold to Russia and emphasized that his companies have substantially undermined Russia.
Federal law prohibits paying individuals to register to vote, and the US Justice Department has reportedly warned Musk's America PAC that its $1 million giveaways to registered voters may violate federal law. Adav Noti, executive director of the nonpartisan Campaign Legal Center, criticized the giveaways as "egregious," highlighting concerns about the influence of wealth on democratic processes.