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Straits Times
36 minutes ago
- Straits Times
Tesla board awards ‘good faith' shares worth $37 billion to CEO Elon Musk
Sign up now: Get ST's newsletters delivered to your inbox Tesla has granted CEO Elon Musk shares worth about US$29 billion (S$37 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 honour Mr Musk's more than US$50 billion pay package from 2018 that was struck down by a Delaware court in 2024. Mr 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 US$23.34 per share, the same as the exercise price of the 2018 award. Tesla will also put to vote a longer-term CEO compensation plan at its annual investor meeting on Nov 6. The move is meant to keep Mr 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 Mr Musk could be wearing thin because of the recent tumultuous months, including the CEO's foray into politics. The move to give Mr 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. Top stories Swipe. Select. Stay informed. 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S&P Global Mobility data shared exclusively with Reuters showed on Aug 4 that Tesla's brand loyalty had plunged since Mr Musk endorsed US President Donald Trump last summer. Mr 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. Mr Musk has threatened to leave unless he gets more control over Tesla. The new stock award will take his Tesla stake, already the largest, to more than 15 per cent from the 12.7 per cent currently, according to Reuters calculations based on data compiled by LSEG. Before Aug 4's grant, Mr Musk had no active compensation plan and Tesla said he had not received meaningful pay since 2017. With the legal fight over his 2018 package expected to continue, the board said it moved to retain Mr Musk's 'extraordinary talent.' Talent magnet 'While we recognise Elon's business ventures, interests and other potential demands on his time and attention are extensive and wide-ranging... we are confident this award will incentivize Elon to remain at Tesla,' said a special committee Tesla formed this year to consider Mr Musk's compensation. It consists of chair Robyn Denholm and independent director Kathleen Wilson-Thompson. 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 recognise the expense if it determines the award is likely to be met, including after the two-year vesting period. 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. Investors and analysts welcomed the news, with Tesla shares rising nearly 2 per cent in early trading. The stock has lost a quarter of its value this year, as of last close. 'Under normal circumstances, a compensation package in the billions would raise some eyebrows. (But) clearly investors have benefited from Musk's stewardship of Tesla,' said Camelthorn Investments adviser Shawn Campbell, who owns Tesla shares. 'This stock grant will bind Musk to Tesla for the next two years.' Battle for pay The Delaware ruling on Mr Musk's 2018 pay package, the largest in Corporate America, had cited flaws in the board's approval process and unfairness to investors. Mr Musk kicked off an appeal against the order in March, claiming a lower court judge made multiple legal errors in rescinding the record compensation. He has argued that the package resulted in spectacular growth for Tesla and yet was determined by the lower Court of Chancery to be unfair to shareholders, who voted twice to approve the plan. Tesla shares have risen nearly 2,000 per cent over the past decade, far outperforming the around 200 per cent rise in the benchmark S&P 500 index in the same period. 'This is simply a repackaged version of what was done years ago and was ruled improper by a judge. It renders the Delaware court decision effectively meaningless,' said Mr Charles Elson, founding director of the Weinberg Centre for Corporate Governance at the University of Delaware. 'You don't have to incentivise him to stay. If he leaves, he throws away 13 per cent of the company, which is still a huge part of his net worth, said Mr Elson, who had filed amicus briefs supporting the court's decision to void Mr Musk's 2018 award. REUTERS
CNA
an hour ago
- CNA
Hitachi mulling over sale of Japanese white goods business, Nikkei reports
Japanese conglomerate Hitachi is considering selling its domestic home appliance business as part of a continued effort to prioritize the group's social infrastructure and digital sectors, the Nikkei newspaper has reported. The deal could be worth around 100 billion yen ($679.49 million) or more, the report said. Hitachi has reached out to multiple companies to buy its white goods business, with South Korea's Samsung Electronics being one of its potential suitors, Nikkei said. However, the report added that Hitachi is keeping the option of retaining the business open as well due to its potential of contributing to the company's brand recognition among consumers. Hitachi and Samsung Electronics did not immediately respond to Reuters' request for a comment. ($1 = 147.1700 yen)
CNA
an hour ago
- CNA
Hitachi considering to sell Japanese home appliance business, Nikkei reports
Japanese conglomerate Hitachi is considering selling its domestic home appliance business in a deal worth around 100 billion yen ($679.49 million) or more, the Nikkei newspaper reported. One of the potential suitors expressing interest in the deal is South Korea's Samsung Electronics, Nikkei added. ($1 = 147.1700 yen)
