Tesla awards CEO Musk millions of shares worth billions
Tesla has given Elon Musk a stock grant of $NZ49bn as a reward for years of “transformative and unprecedented” growth. That’s despite a recent switch into right-wing politics that hurt sales, profits and Tesla’s stock price.
In gifting almost 100m restricted shares, the electric car company board noted that Musk hasn’t been paid in years. That’s because his 2018 compensation package was rejected by a Delaware court. The share gift comes eight months after a judge revoked the 2018 pay package for a second time. Tesla has appealed the ruling.
The Tesla board said the grant was a “first step, good faith” way of retaining Musk and keeping him focused. Musk said recently that he needed more shares and control so shareholder activists couldn’t oust him.
“Rewarding Elon for what he has done and continues to do for Tesla is the right thing to do,” the company said in a recent filing. It noted an increase of $NZ1.242tn in Tesla’s value on the stock exchange since 2018.
However, Tesla shares have dropped by 25 per cent this year following Musk’s brief affiliation with President Donald Trump. Moreover, Tesla faces intensifying competition from the big American automakers, and from China.
Read our review of the current Model 3.
In its most recent quarter, Tesla reported that quarterly profits plunged from NZ2.35bn to $NZ691m. Investors have grown worried about the trajectory of the company after Musk spent much of his time in Washington, trying to slash government expenditure.
The electric vehicle maker said in the regulatory filing that Musk must initially pay Tesla $NZ39.45 per share which is equal to the exercise price per share of the 2018 pay package.
A US analyst commenting on the payment said: “We believe this grant will now keep Musk as chief executive of Tesla at least until 2030 and removes an overhang on the stock.”
Tesla’s stock rose nearly two per cent in trading after the announcement.
