Tesla is a very well-known name in the business world, not only in America, but across the globe. This can be partly due to how everyone associates the name with that of the CEO, Elon Musk. But, apart from all of this, the company is really remarkable. They manufacture an array of products, such as electric automobiles, solar panels as well as batteries for home power storage and for cars. The company has, in essence, been in operation since 2003.
Understanding the dynamics behind Tesla
Tesla TSLA.O has granted CEO Elon Musk shares worth about $29 billion in a new pay deal aimed at keeping the billionaire entrepreneur at the helm during a crucial pivot from its struggling core auto business to robotaxis and humanoid robots. The company described the “interim award” of the 96 million new shares as a first step, “good faith” payment to honor Musk’s more than $50 billion pay package from 2018 that was struck down by a Delaware court last year.
Musk can claim the new award if he remains in a top executive role for another two years and a court does not reinstate the 2018 package currently on appeal. He has to hold the shares for five years and can buy them for $23.34 per share, the same as the exercise price of the 2018 award. Tesla will also put to a vote a longer-term CEO compensation plan at its annual investor meeting on November 6.
The move is meant to keep Musk, the public face of Tesla and architect of its robotaxi strategy, focused on the electric-vehicle maker as it navigates a shift to cybercabs and robotics from its mainstay auto business. It also seems to quell any speculation that the board’s patience with Musk could be wearing thin because of the recent tumultuous months, including the CEO’s foray into politics.
An award with a purpose
The move to give Musk greater control of the company suggests that directors still see him as best suited to tackle Tesla’s growing list of challenges in the years ahead. Sales have been falling at the company due to its aging vehicle line-up, tough competition, and Musk’s right-wing political stances that have tarnished its brand. S&P Global Mobility data shared exclusively with Reuters showed on Monday that Tesla’s brand loyalty had plunged since Musk endorsed U.S. President Donald Trump last summer.
The S&P Global Mobility report provides some comprehensive insights, specifically into the automotive industry. This also includes forecasts for global light vehicle sales. Musk’s involvement in politics and his wider business empire, including AI startup xAI, have also sparked concerns about his devotion to Tesla, the main source of his wealth. Musk has threatened to leave unless he gets more control over Tesla.
The complexities of Elon Musk
The company said it would not record compensation expense for the award as it does not currently expect the performance condition to be “probable of being met.” It will re-evaluate and recognize the expense if it determines the award is likely to be met, including after the two-year vesting period. Last year, the company said a new compensation package for Musk on par with the 2018 plan would result in an accounting charge of more than $25 billion.
While the plan unveiled Monday is about one-third of the size of the 2018 plan, the share price has nearly doubled in the past year, increasing the potential cost. The new shares will also be forfeited or offset if the Delaware courts fully reinstate the 2018 stock award, ensuring there is no “double dip,” the special committee said. In the business environment, the act of double dipping essentially means to receive either a benefit, compensation, or advantage from two sources for the same effort or resource.
Tesla CEO Elon Musk currently has a net worth of approximately $409,1 billion. Apart from his impressive finances, he is truly a remarkable individual. Some of his accolades include the fact that he cofounded seven companies, most notably Tesla and SpaceX. He also bought Twitter during 2022 and renamed it to X. During 2023, he also founded the company xAI.
GCN.com/Reuters.