Elon Musk's unprecedented wealth is in large part tied up in Tesla, the electric vehicle manufacturer he has positioned at the center of his sprawling business empire. But Musk's dependence on Tesla as his primary earnings engine is a two-way street, particularly as the car company scrambles to hold its mercurial CEO's attention amid sliding sales and a slumping reputation.
Tesla's two-person Special Committee of the Board of Directors announced plans this week to award Musk millions of shares of company stock, worth up to $30 billion, because he has "not received meaningful compensation" at the company for years. "Retaining" Musk at Tesla, the committee said, is "more important than ever."
An 'astounding' pay package The award is a "first step, 'good faith' payment" to Musk, said Tesla board members Robyn Denholm and Kathleen Wilson-Thompson in a company filing. Musk's previous compensation package, estimated at $50 billion, has been tied up in Delaware courts since it was first announced in 2018. The new package offers Musk "roughly 3% of the company," said The New York Times. It's an "astounding figure," but still far below Tesla's nearly $1 trillion market capitalization. Nevertheless, the package would likely "outstrip most or all pay packages for CEOs at publicly traded companies," said The Wall Street Journal.
This new compensation package will be "forfeited" if Musk and Tesla prevail in Delaware courts and are allowed to exercise the 2018 deal, said CNBC. The package is scheduled to vest in two years, so long as Musk remains Tesla's CEO "or in another key executive position."
'Crucial pivot' The Tesla board is focused on "keeping the billionaire entrepreneur at the helm" of the company amid a "crucial pivot from its struggling core auto business" to Musk's long-promised rollout of "robotaxis and humanoid robots," Reuters said. Tesla has faced sagging sales lately, "wrought by its aging vehicle line-up, tough competition," and "Musk's political stances" that have "alienated some potential buyers."
Company stakeholders have been "growing weary" of Musk's "forays into politics at the expense of their earnings," said The Daily Beast. The new tranche of shares is "thought to be an effort to ease this tension." And unlike Musk's 2018 compensation package, this proposal "does not appear to be tied to goals like increasing the company's stock price," said TechCrunch. |