Elon Musk was given a potential $1 trillion incentive from Tesla.
Tesla Approves New Compensation Package for Elon Musk
Tesla has approved a new compensation package for its CEO, Elon Musk, worth approximately $29 billion in August. The plan, which spans a decade, has been met with some controversy, as it does not repeat the conditions of the previous compensation package and is subject to shareholder approval.
The voided compensation package, approved by the board in 2018, included options for 303 million shares and was tied to the company's financial and market performance. However, a Delaware court twice voided the $56 billion package in 2024.
The new package does not mention the premarket trading of Tesla's stock or the need for shareholder approval. Instead, the primary condition for Musk's share increase is the growth of the company's market value. If the conditions are met, Musk will control 25% of the company's shares.
The new compensation package can earn Musk 96 million shares if he remains CEO or holds key executive positions for at least two years. This could potentially be a significant reward, considering that Tesla's current market value stands at $1.1 trillion, making each share worth approximately $345.26.
One shareholder has challenged the payout of the voided compensation package, alleging that Tesla did not adequately disclose information about the package and its performance metrics. The legal proceedings regarding the voided package are ongoing.
Robyn Denholm, Tesla's chairperson, has stated that retaining and motivating Musk is crucial for Tesla to achieve its targets and become the most valuable company in history. The goal is to boost Tesla's market capitalization to $8.5 trillion.
Tesla has amended its corporate charter following the legal proceedings, now requiring an investor to own at least 3% of the shares to file a lawsuit. Shareholders of Tesla have the opportunity to vote on the acceptance of Musk's planned acquisition of a 2.5-percent stake in Tesla shares by September 5. The planned compensation plan vote for Musk is scheduled for November 6.
It is worth noting that Musk does not receive a salary for his work at the company. His contributions are rewarded through stock-based compensation. Despite the controversy surrounding the new compensation package, it remains to be seen how shareholders will vote on the matter in November.
