Austin, Texas: Tesla has given CEO Elon Musk a new pay package that includes 96 million shares of restricted stock worth about $29 billion. This choice comes just six months after Chancellor Kathaleen St. Jude McCormick of Delaware said that the firm had to take back Musk’s original compensation package from 2018, which was worth up to $56 billion at the time.
Tesla’s board disclosed the additional award on Monday in a regulatory filing. The board was acting on a suggestion from a “special committee.” The filing says that the new shares are meant to “incentivize Elon to stay at Tesla” and work on the company’s future, which is becoming more and more focused on AI, robots, and self-driving technologies.
Musk has to pay Tesla $23.34 per share, which is the same price he would have had to pay for the 2018 package that was canceled. The shares will vest in two years, provided he continues to serve in a senior leadership role at the company. Tesla’s motion also makes it clear that this new award is only temporary and will be taken away or canceled if the court on appeal reinstates the old 2018 pay package. The company has stated there will be “no double dip.”
A Tesla stockholder filed a complaint against Musk’s pay, which started the legal fight. The judge made a decision in December. Chancellor McCormick said that the 2018 salary deal came about because of “sham negotiations” with directors who weren’t independent. At the time, she also cut the plaintiff’s lawyers’ huge fee proposal from more than $5 billion to $345 million.
In March, Musk officially appealed the court’s order, and the legal procedure is still going on. In the meanwhile, the fresh stock grant is aimed to ease some shareholders’ worries about Musk’s future commitment to Tesla and its strategic direction. This year, the company’s stock has been under pressure because of falling EV sales, competition, and negative reactions to Musk’s political activity, according to experts and investors.