World’s richest man threatened to quit as chief executive of electric-vehicle maker if he was not given more stock!
Tesla’s board has approved the award of 96mn shares worth about $30bn to Elon Musk as part of a new pay deal after the billionaire chief executive threatened to leave the electric-vehicle maker if he was not given more control. In a filing on Monday, Tesla said the decision was recommended by a special committee comprising just the chair, Robyn Denholm, and her fellow director Kathleen Wilson-Thompson. It was then approved by the board. “Retaining Elon is more important than ever before,” the company said in a letter to shareholders. “We are confident that this award will incentivise Elon to remain at Tesla . . . energising and focusing [him] to propel Tesla into its next era of growth.” Tesla shares rose 2.2 per cent to $309.26 on Monday. Tesla and Musk have been fighting a shareholder lawsuit in Delaware for seven years over a previous $56bn pay award, the largest in US history. The package was struck down in January 2024 by Delaware judge Kathaleen McCormick, who ruled that it was excessive and said that board members were in thrall to Musk. Musk has since repeatedly threatened to leave Tesla and prioritise his other enterprises unless he is given more control over it. The world’s richest man also runs SpaceX, xAI, Neuralink and the Boring company. Following lacklustre results last month, Musk renewed that threat, warning that he could “easily be ousted by activist shareholders”. “I think my control over Tesla should be enough to ensure that it goes in a good direction, but not so much control that I can’t be thrown out if I go crazy,” Musk said. The addition of 96mn shares will raise Musk’s holding from under 13 per cent to about 16 per cent. The CEO must “serve continuously in a senior leadership role” for two years and will be subject to a five-year holding period from the grant date. To receive the new award, Musk must pay the company $23.34 a share of restricted stock as it vests, which the company said was equal to the exercise price per share of the 2018 pay award. After subtracting the amount Musk has to pay to receive the award and further discounting it to take account of the restrictions, Tesla said that “for illustrative purposes only” the package had an accounting value on August 1 of $23.7bn. The company said that to prevent a “double dip”, Musk would forgo the new award if his original bumper package were reinstated after an appeal to Delaware’s Supreme Court. Tesla’s board is battling to resolve uncertainty over Musk’s future amid declining sales and pressures created by his fractious relationship with US President Donald Trump, who has implemented anti-EV policies since returning to the White House. Musk promised to refocus his attention on Tesla after the carmaker’s sales collapsed in Europe and other key markets during his time working in the Trump administration, which ended in a spectacular falling out between the two men earlier this year. In their letter to shareholders on Monday, Denholm and Wilson-Thompson stressed that the award was “a critical first step” to keep Musk focused on Tesla, but cautioned that it was “limited by the capacity of our current equity incentive plan”. The board argued that Musk is essential to Tesla as it pivots to artificial intelligence, autonomous driving and humanoid robots, which they hope will generate the group’s main source of revenue in the future. “To succeed, it requires a leader who combines strategic foresight, adaptability, and relentless execution to outperform competition and inspire the team,” chair Denholm wrote. “Losing Elon would not only mean the loss of his talents but also the loss of a leader who is a magnet for hiring and retaining talent at Tesla.”
Tesla’s board has approved the award of 96mn shares worth about $30bn to Elon Musk as part of a new pay deal after the billionaire chief executive threatened to leave the electric-vehicle maker if he was not given more control. In a filing on Monday, Tesla said the decision was recommended by a special committee comprising just the chair, Robyn Denholm, and her fellow director Kathleen Wilson-Thompson. It was then approved by the board. “Retaining Elon is more important than ever before,” the company said in a letter to shareholders. “We are confident that this award will incentivise Elon to remain at Tesla . . . energising and focusing [him] to propel Tesla into its next era of growth.” Tesla shares rose 2.2 per cent to $309.26 on Monday. Tesla and Musk have been fighting a shareholder lawsuit in Delaware for seven years over a previous $56bn pay award, the largest in US history. The package was struck down in January 2024 by Delaware judge Kathaleen McCormick, who ruled that it was excessive and said that board members were in thrall to Musk. Musk has since repeatedly threatened to leave Tesla and prioritise his other enterprises unless he is given more control over it. The world’s richest man also runs SpaceX, xAI, Neuralink and the Boring company. Following lacklustre results last month, Musk renewed that threat, warning that he could “easily be ousted by activist shareholders”. “I think my control over Tesla should be enough to ensure that it goes in a good direction, but not so much control that I can’t be thrown out if I go crazy,” Musk said. The addition of 96mn shares will raise Musk’s holding from under 13 per cent to about 16 per cent. The CEO must “serve continuously in a senior leadership role” for two years and will be subject to a five-year holding period from the grant date. To receive the new award, Musk must pay the company $23.34 a share of restricted stock as it vests, which the company said was equal to the exercise price per share of the 2018 pay award. After subtracting the amount Musk has to pay to receive the award and further discounting it to take account of the restrictions, Tesla said that “for illustrative purposes only” the package had an accounting value on August 1 of $23.7bn. The company said that to prevent a “double dip”, Musk would forgo the new award if his original bumper package were reinstated after an appeal to Delaware’s Supreme Court. Tesla’s board is battling to resolve uncertainty over Musk’s future amid declining sales and pressures created by his fractious relationship with US President Donald Trump, who has implemented anti-EV policies since returning to the White House. Musk promised to refocus his attention on Tesla after the carmaker’s sales collapsed in Europe and other key markets during his time working in the Trump administration, which ended in a spectacular falling out between the two men earlier this year. In their letter to shareholders on Monday, Denholm and Wilson-Thompson stressed that the award was “a critical first step” to keep Musk focused on Tesla, but cautioned that it was “limited by the capacity of our current equity incentive plan”. The board argued that Musk is essential to Tesla as it pivots to artificial intelligence, autonomous driving and humanoid robots, which they hope will generate the group’s main source of revenue in the future. “To succeed, it requires a leader who combines strategic foresight, adaptability, and relentless execution to outperform competition and inspire the team,” chair Denholm wrote. “Losing Elon would not only mean the loss of his talents but also the loss of a leader who is a magnet for hiring and retaining talent at Tesla.”
The directors said the special committee would continue to work on a longer-term compensation strategy for Musk, which would be put to a shareholder vote at its delayed annual meeting on November 6. The letter also indicated that the directors were working on other steps to ensure he remained committed to the company, prompting speculation whether Tesla could consider investing in Musk’s AI company xAI to boost his control over his empire. While Musk has said he was not in favour of a full merger between the two companies, on July 13, he posted on X, “If it was up to me, Tesla would have invested in xAI long ago. We will have a shareholder vote on the matter.” Musk authorised a $2bn investment from his rocket company, SpaceX, into xAI last month. Wedbush analyst Daniel Ives said he believed the $30bn award would keep Musk as Tesla chief executive until at least 2030 and it removed a downward pressure on the stock. “Musk remains Tesla’s big asset and this comp issue has been a constant concern for shareholders once the Delaware soap opera began,” Ives added