$29 billion! Tesla approves the grant of 96 million restricted stock awards to Musk

Wallstreetcn
2025.08.04 12:10
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This temporary stock award is designed to gradually enhance Musk's voting power, and the board's special committee stated that this is crucial for keeping Musk focused on Tesla's mission. This award will only vest if Musk remains in a key executive position until 2027 and comes with a five-year holding period restriction

The Tesla board has approved the grant of 96 million new shares to CEO Elon Musk, valued at approximately $29 billion, aimed at ensuring that the billionaire entrepreneur continues to stay with the company.

This temporary stock award is designed to gradually enhance Musk's voting power, and the board's special committee stated that this is crucial for keeping Musk focused on Tesla's mission. The committee noted in regulatory filings:

While we recognize that Elon has a wide and diverse range of business investments, interests, and other potential demands, we believe this award will incentivize Elon to remain at Tesla.

Following the announcement, Tesla's stock price rose over 2% in pre-market trading.

Tesla is currently undergoing a critical transformation, shifting from a promised affordable electric vehicle platform to robot taxis and humanoid robots, positioning itself as an AI and robotics company rather than a traditional automaker.

Legal Disputes Prompt New Compensation Plan

In 2024, a Delaware court overturned Musk's 2018 compensation plan valued at over $50 billion, citing flaws in the approval process by Tesla's board and unfairness to shareholders. Musk appealed the ruling in March, claiming that the lower court judge made multiple legal errors in overturning the record compensation.

Earlier this year, Tesla stated that the board had formed a special committee to consider compensation matters involving Musk, but did not disclose details. The new temporary award stock will only vest if Musk remains in a key executive role until 2027, with a five-year holding period restriction.

According to regulatory filings, if the Delaware court fully reinstates the 2018 CEO performance award, the new temporary grant will be forfeited or offset, preventing "double-dipping." Musk is required to pay Tesla $23.34 for each share of restricted stock that vests, which is equal to the exercise price of the 2018 CEO award.

Tesla Faces Crisis Again, Musk in a Tough Spot

Tesla's stock price has fallen about a quarter this year, as the company faces challenges from aging models, intense competition, and Musk's political stance alienating some potential buyers, leading to a decline in sales. The U.S. government's reduction of support for electric vehicles has further exacerbated these challenges.

Musk stated during last month's earnings call that the reduction in subsidies could lead to "a few tough quarters" for the company before significant growth in revenue from autonomous driving software and services begins later next year. Research firm S&P Global Mobility shared exclusive data with Reuters showing that Tesla's brand loyalty has significantly declined since Musk supported former President Trump last summer.

Tesla's aging product lineup is also facing fierce competition from various electric vehicle models launched by traditional automakers such as General Motors, Hyundai, and BMW. The Cybertruck, as Tesla's only new model released since 2020, has underperformed despite Musk's predictions of annual sales reaching hundreds of thousands

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