According to Reuters, Tesla just granted CEO Elon Musk a $29 billion stock award. This amount is intended to help him continue leading the company as it shifts focus from the slowing automotive business to AI and robotics.
This event comes at a critical time as Tesla's core electric vehicle business is losing momentum. To maintain its lead, Musk is steering the company towards bold new projects, including robot taxis and humanoid robots, fields he claims will shape Tesla's future.
Board Supports Musk's Vision
Tesla's board of directors posted on X, emphasizing the importance of retaining and motivating top talent, starting with Elon. They praised his unique combination of leadership and technical skills, calling him a "builder of revolutionary and profitable companies."
Where Does the Stock Grant Come From?
The $29 billion stock award is part of the 2018 compensation agreement, aimed at rewarding Elon Musk for achieving major goals like Tesla's value and revenue growth. A judge blocked this plan earlier this year due to fairness concerns, but shareholders have now voted to restore it, unlocking the payment for Musk.
Tesla calls the granting of 96 million new shares the "goodwill" first step towards implementing Musk's initial $50 billion compensation package. A new long-term CEO compensation plan will be voted on by investors at the annual meeting on November 6.
Shareholder Approval and New Terms
Musk's new stock shares can only be transferred if he retains a significant executive position until 2027. After the transfer, he must hold them for five years, unless to cover taxes or the purchase price of $23.34 per share, which corresponds to the price set in his 2018 compensation plan. If the court restores his 2018 compensation agreement, this grant will be canceled or reduced to avoid double payment.
This plan was supported by a special committee, including chair Robyn Denholm and director Kathleen Wilson-Thompson.
The committee noted that although Elon has many competing projects for his time, they believe the award will "encourage Elon to stay at Tesla."
Tesla Up 2%, Bitcoin Price Increase Highlights
Tesla shares rose 2% following the announcement of Elon Musk's new compensation agreement. However, shares have fallen 25% this year due to declining sales, aging models, and backlash over Musk's political views. Customer loyalty has waned since Musk endorsed Trump, and analysts predict sales will continue to decline in 2025.
Tesla did not meet estimates in the second quarter with revenue of $22.5 billion and EPS of $0.40, both below forecasts.
However, Tesla's $284 million profit from Bitcoin stands out. Thanks to new accounting rules, the amount of cryptocurrency the company holds has increased from $951 million to $1.24 billion. But this increase could be even larger. Tesla purchased 43,200 BTC in 2021 for $1.5 billion, later selling more than 75% during a market downturn, netting only $936 million.