Tesla Rewarded Musk with $29 Billion in Stock
Tesla’s board of directors approved an interim reward for Elon Musk of 96 million company shares, equivalent to $29 billion. This decision is meant to ensure that the CEO remains with the company for at least two more years. If the court reinstates the canceled $50 billion reward package from 2018, Musk will not be able to receive both payments simultaneously.
A special Tesla committee has been working for several months to find a way to retain Musk at the company. In a letter to shareholders, the company noted that this interim reward will help increase Musk’s voting rights, which is an important factor for his motivation.
“This interim reward is structured to gradually increase his voting rights after being granted, which, as he has repeatedly informed us (and shareholders have confirmed), is an important part of incentivizing him to remain focused on the critical work we are doing at Tesla”
Deal Terms
If Musk leaves Tesla before the end of the two-year term, he will lose the right to this reward. The company is also preparing a long-term compensation plan for the CEO, which will be put to a shareholder vote on November 6th.
This situation demonstrates how dependent Tesla is on its charismatic leader. Despite the legal battles surrounding the previous reward package, the company is willing to take on new financial obligations to keep Musk. At the same time, the condition prohibiting a “double payment” indicates an attempt to find a balance between shareholder interests and retaining a key executive.