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Tesla has approved an interim stock award valued at around $30 billion for CEO Elon Musk. As per a regulatory filing on August 4, the award consists of 96 million shares that will vest if Musk remains Tesla’s CEO for the next two years. The shares have an exercise price of $23.34, identical to the one in his original 2018 deal that was recently overturned by a Delaware court.
This Tesla shares award comes in response to a Delaware Chancery Court decision that nullified Musk’s earlier $50 billion compensation following a shareholder lawsuit. Tesla’s board is appealing the ruling and stated that this new award is a ‘good faith’ gesture. The company also said that its a first step toward a long-term compensation plan. A new package will be up for shareholder vote at Tesla’s annual meeting on November 6.
Tesla stock responded positively to the news, climbing 2.7% to $310.80 in pre-market trading on the New York Stock Exchange. The board emphasized Musk’s value to the company, stating, ‘After all, a deal is a deal.’ The statement underscored the strategic need to retain him.
Despite his attention being split across five major companies and political activity, Musk recently reaffirmed his dedication to Tesla. In a May interview, he said he intends to stay CEO of the EV automaker for at least five more years.
Far from a conventional payout, the Tesla stock award represents a strategic corporate governance decision. It aligns executive compensation directly with the long-term creation of shareholder value, diverging from traditional salary or bonus schemes. It also solidifies Musk's deep financial commitment to the company’s future trajectory. It remains to be seen if it pays off in the future or not.
Also Read: The Tesla Stock Dilemma: How Political Polarization Could Fragment Musk’s Consumer Base
