In December, a Delaware judge reaffirmed her earlier ruling that Tesla must revoke Musk’s multibillion-dollar pay package, finding he engineered it in sham negotiations with directors who were not independent.Jose Luis Magana/The Associated Press
Tesla Inc. TSLA-Q is awarding chief executive Elon Musk 96 million shares of restricted stock valued at approximately US$29-billion, just six months after a judge ordered the company to revoke his massive pay package.
The electric-vehicle maker said in a regulatory filing on Monday that Mr. Musk must first pay Tesla US$23.34 a share of restricted stock that vests, which is equal to the exercise price per share of the 2018 pay package that was awarded to the company’s CEO.
In December, Delaware Chancellor Kathaleen St. Jude McCormick reaffirmed her earlier ruling that Tesla must revoke Mr. Musk’s multibillion-dollar pay package. She found that Mr. Musk engineered the landmark pay package in sham negotiations with directors who were not independent.
At the time Justice McCormick also rejected an equally unprecedented and massive fee request by plaintiff attorneys, who argued that they were entitled to legal fees in the form of Tesla stock valued at more than US$5-billion. The judge said the attorneys were entitled to a fee award of US$345-million.
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The rulings came in a lawsuit filed by a Tesla stockholder who challenged Mr. Musk’s 2018 compensation package.
That pay package carried a potential maximum value of about US$56-billion, but that sum has fluctuated over the years based on Tesla’s stock price.
Mr. Musk appealed the order in March. A month later, Tesla said in a regulatory filing that it was creating a special committee to look at Mr. Musk’s compensation as CEO.
In a letter to shareholders, Tesla’s board said that Mr. Musk hasn’t received “meaningful compensation” for eight years, citing the 2012 CEO Performance Award that was last earned in 2017. The board argued that Mr. Musk deserves compensation because he’s delivered “transformative and unprecedented growth” that’s “translated into immense value generated for Tesla and all our shareholders.”
Mr. Musk has been one of the richest people in the world for several years.
Wedbush analyst Dan Ives feels Mr. Musk’s stock award may alleviate some Tesla shareholder concerns.
“We believe this grant will now keep Musk as CEO of Tesla at least until 2030 and removes an overhang on the stock,” Mr. Ives wrote in a client note. “Musk remains Tesla’s big asset and this comp issue has been a constant concern of shareholders once the Delaware soap opera began.”
Tesla shares have plunged 25 per cent this year, largely owing to blowback over Mr. Musk’s affiliation with U.S. President Donald Trump. But Tesla also faces intensifying competition from both the big Detroit automakers, and from China.
In its most recent quarter, Tesla reported that quarterly profits plunged from US$1.39-billion to US$409-million. Revenue also fell and the company fell short of even the lowered expectations on Wall Street.
Under pressure from shareholders last month, Tesla scheduled an annual shareholders meeting for November to comply with Texas state law.
A group of more than 20 Tesla shareholders, which have watched Tesla shares plummet, said in a letter to the company that it needed to at least provide public notice of the annual meeting.
Investors have grown increasingly worried about the trajectory of the company after Mr. Musk had spent so much time in Washington this year, becoming one of the most prominent officials in the Trump administration in its bid to slash the size of the U.S. government.