Tesla splurges $30 billion to "retain talent"! Grants Musk temporary stock awards to ensure focus on CEO position for the next two years

According to Zhitong Finance APP, Tesla (TSLA.US) has approved a temporary stock award worth approximately $30 billion for CEO Elon Musk. This substantial compensation is intended to ensure that the billionaire remains focused on the automaker amid ongoing legal disputes over the 2018 compensation plan. Tesla stated in a regulatory filing on Monday that the new agreement includes 96 million shares of company stock, which will vest in Musk's name if he continues to serve as CEO for the next two years. The exercise price for the restricted stock is $23.34, consistent with the price in the previous 2018 compensation plan.

Before the U.S. stock market opened on Monday, Tesla's stock price rose by as much as 2.9%. As of last Friday's close, the company's stock price has fallen 25% this year, while the S&P 500 index has risen by 6% during the same period.

The board emphasized the importance of retaining Musk, stating in a letter to shareholders released on Monday that this award is the "first step payment made in good faith." "After all, 'a deal is a deal,'" the board stated, adding that it will submit a longer-term CEO compensation strategy for a vote at the electric vehicle manufacturer's annual shareholder meeting on November 6.

Prior to this move, the Delaware Chancery Court ruled a previous compensation plan worth over $50 billion invalid following a shareholder lawsuit. This ruling is currently under appeal, and after Tesla relocated its legal registration to Texas last year, a special board committee has been exploring options for a new compensation agreement for Musk. This board committee consists of two members: Chair Robin Denholm and board member Catherine Wilson-Thompson.

The board stated that due to the legal challenges appearing unlikely to be resolved in the short term, and "in the context of an increasingly fierce talent war in artificial intelligence and Tesla being at a critical turning point," action must be taken to retain Musk.

This award requires Musk to continue serving in a senior leadership role at Tesla during the two-year vesting period and to hold the stock for five years from the date of grant. If the Delaware court fully reinstates the 2018 performance award, Musk must forfeit or return this temporary award. The document clearly states: "Simply put, there shall be no 'double dipping.'"

The board noted that shareholders had previously approved granting Musk substantial stock awards, and as Tesla's business expands from automotive and energy sectors into artificial intelligence and robotics, the company needs to retain talent, especially the CEO.

The letter stated: "We believe this directly addresses the primary concern shared by shareholders and the board: to incentivize Elon to focus on Tesla and drive the company into the next era of growth, while we continue to pursue legal action to restore the 2018 CEO performance award."

This proposal highlights Musk's control over the company and may ensure that he will not relinquish the CEO title in the near future. Musk has served as CEO of the automaker since 2008, and in a May interview with Bloomberg, he stated his commitment to remain at the helm for the next five years.

Despite Musk having multiple responsibilities to juggle, the Tesla board remains firmly supportive of him. In addition to overseeing four other companies, political affairs have also occupied a significant amount of Musk's attention this year. He has provided financial support for U.S. President Donald Trump's re-election campaign and has led the "Dogecoin initiative" to reshape federal government decisions, provoking strong opposition to the electric vehicle manufacturer The board stated in the letter: "We recognize that Elon’s business investments, interests, and other matters that may occupy his time and energy are broad and diverse, including his leadership roles at xAI, SpaceX, Neuralink, X Corp, and Boring Company, as well as other hobbies. However, we believe this reward will incentivize Elon to stay at Tesla. Clearly, losing Elon means not only losing his talent but also losing a leader who can attract and retain talent at Tesla."

This decision has received preliminary approval from some investors and analysts. Wedbush analyst Dan Ives stated in a report that this "eliminates a potential risk for the stock" and may ensure that Musk continues to serve as CEO for the coming years. "Musk remains a significant asset for Tesla, and the compensation issue has always been a focal point for shareholders."