plan without shareholders’ approval.
The company’s last CEO award dates back to 2018, but it was rescinded by a judge last year after a long litigation determined that CEO Elon Musk virtually negotiated the award against himself due to his control of the board.
In a letter to shareholders, Tesla’s board described the new award, which is explained as an “interim award to make it right by Musk”:
- 96 million restricted shares of stock, subject to Elon paying a purchase price upon meeting a two-year vesting term, to be delivered after receipt of antitrust regulatory approval;
- The purchase price will be equal to the split adjusted exercise price of the stock options awarded to Elon under the 2018 CEO Performance Award ($23.34 per share);
- A requirement that Elon serve continuously in a senior leadership role at Tesla during the two-year vesting term;
- A pledging allowance to cover tax payments or the purchase price;
- A mandatory holding period of five years from the grant date, except to cover tax payments or the purchase price (with any sales for such purposes to be conducted through an orderly disposition in coordination with Tesla); and
- If the Delaware courts fully reinstate the 2018 CEO Performance Award, this interim award will be forfeited or returned or a portion of the 2018 CEO Performance Award will be forfeited. To put it simply, there cannot be any “double dip.” Elon will not be able to keep this new award in addition to the options he will be awarded under the 2018 CEO Performance Award should the courts rule in our favor.
Tesla made it sound like this award has been automatically awarded after board approval, and unlike previous awards, Tesla shareholders won’t vote on it.
2018:
Stock options (303.96 million shares, post-stock-split adjusted) with an exercise price of $23.34 per share.
2025:
Restricted stock (96 million shares) with a purchase price of $23.34 per share (matching the 2018 exercise price).
2018:
Potential realized value: Up to ~$56 billion (fluctuated with stock price; valued at ~$46.8 billion in mid-2024). Net value depended on stock appreciation above strike price.
2025:
~$29 billion (based on Tesla’s stock price of ~$300 per share). Net value after purchase price: ~$26.7 billion.
The number shares is a third of 2018. And the Tesla share price is down.
And the estimated value is half.
I would think this would sail through without court action. But what do I know.