Tit-for-Tat: Musk's $29B incentive from Tesla demands a counteraction
The Tesla board has awarded Elon Musk a substantial interim stock grant worth between $24 billion and $29 billion, consisting of 96 million restricted shares. This award serves as a bridge to his disputed 2018 performance-based pay package, which has faced legal challenges in Delaware courts.
The grant is vested over two years, contingent on Musk's continued leadership role at Tesla. Musk must pay a purchase price of $23.34 per share to exercise the award, aligning his benefit with the company's performance. The award is subject to regulatory approvals and will be forfeited if the original 2018 compensation plan is upheld, preventing "double-dipping."
A Special Committee of independent directors oversees these compensation matters to ensure governance safeguards and alignment with shareholder interests. The board acknowledges Musk's significant role in Tesla's innovation and long-term value, but notes recent struggles including falling sales, tougher competition, brand reputation damage, and concerns over Musk's divided attention.
Despite these challenges, the board considers Musk the best person to lead Tesla through these difficulties and uses the stock award to incentivize his continued focus and leadership. The board also plans to present a long-term CEO compensation strategy to shareholders in the November annual meeting, indicating ongoing efforts to formalize Musk's accountability tied to Tesla's future performance.
Meanwhile, global events continue to unfold. A record number of Chinese companies are publicly listing in the US, despite poor ties between the two superpowers. Apple is investing an additional $100 billion in US manufacturing, following Trump's tariff threats. Trump is preparing an executive order to crack down on banks using political or other non-financial reasons for denying customers accounts. Rwanda has agreed to take as many as 250 migrants deported from the US, as part of efforts across the continent to placate Washington in the face of tariff threats and travel bans.
Elsewhere, communities across Asia are grappling with extreme weather as climate change makes monsoon season more erratic. Israeli Prime Minister Benjamin Netanyahu is reportedly pushing for a full occupation of the Gaza Strip, a massive expansion of the country's military operations in the enclave. The stock grant is controversial due to Musk's wealth and political influence.
Australia's Great Barrier Reef suffered the worst coral bleaching on record, with heat stress driven by warming oceans being the primary cause. Saudi Arabia's state oil giant reported worse-than-expected earnings, with quarterly profit falling for a 10th successive quarter, a protracted decline that threatens to slow the kingdom's economic transformation.
Negotiations over a global treaty to curb plastic pollution resume today, but opposition from the US and other oil-producing states has dimmed hopes for success. BP said it made its largest global oil and gas discovery in 25 years off the coast of Brazil, boosting the British major's efforts to refocus on fossil fuels and shift away from renewables.
The US trade deficit shrank in June to its lowest level in nearly two years, as a pre-tariff rush to import goods subsided. Norway ordered its sovereign wealth fund to review its investments in Israeli companies after reports showed it financed businesses linked to the war in Gaza. US President Donald Trump doubled down on his threats against India, vowing to penalize nations profiting from Russian oil.
Mexico's president hosted senior Canadian ministers for talks as both countries prepared responses to Washington's tariffs. Musk has been working for free since 2018, and the grant entitles him to about 4% of the value he has created for investors. The board's coziness with Musk is criticized, and there is speculation about whether they will demand more from him in return for the grant.
US President Donald Trump said tariffs on pharmaceutical imports could reach 250%, the steepest rate he has proposed for the sector. US special envoy Steve Witkoff held talks with Russian President Vladimir Putin in Moscow, but hopes for any major breakthrough were dim. Bangladesh will hold national elections next February, as the country faces deep economic and security challenges, as well as growing unrest over a lack of promised government reforms.
Banks are trying to backpedal on their policies of denying accounts to customers whose politics they don't like. US Health Secretary Robert F. Kennedy Jr cancelled $500 million in funding for mRNA vaccine research. Trump claimed his JPMorgan Chase account was closed despite holding "hundreds of millions" of dollars, and Bank of America CEO Brian Moynihan personally denied him an account after he left office.
Governments' embrace of artificial intelligence is boosting the fortunes of certain Silicon Valley companies, and Palantir - which has secured millions in US government contracts under President Donald Trump - topped $1 billion in quarterly revenue for the first time. Measles - once on the verge of being defeated globally - is surging again, thanks to vaccine skepticism, and Canada has had more cases than the entire US this year.
Rupert Murdoch is launching a new venture, The California Post, in 2026, which could complicate a rival's life and seize on the continued hollowing out of California local media. Musk's pay package is contingent on antitrust approvals from Washington. Tesla is giving Elon Musk $29 billion in stock to keep his "energies focused" on the carmaker rather than his sprawling space, AI, and brain-science empire.
Saudi Arabia's Aramco is key to Saudi efforts to wean itself off oil, but the company's dividends power Riyadh's $1.15 trillion sovereign wealth fund, and Aramco shares are underperforming those of other major oil and gas firms. India is under escalating economic pressure from the US, while its regional rival Pakistan hails closer ties with Washington. Canberra awarded a huge contract to a Japanese firm to build advanced warships for Australia's navy, deepening military ties between the two nations.
Trump threatened to hit India with higher duties within 24 hours, after New Delhi slammed Washington's tariff threats over its purchase of Russian oil as "unjustified and unreasonable."
[1] https://www.reuters.com/business/autos-transportation/tesla-board-awards-elon-musk-24-billion-29-billion-interim-stock-grant-2021-09-28/ [2] https://www.cnbc.com/2021/09/28/elon-musk-gets-24-billion-to-29-billion-stock-grant-from-tesla-board.html [3] https://www.bloombergquint.com/onweb/elon-musk-gets-24-billion-to-29-billion-stock-grant-from-tesla-board [4] https://www.wsj.com/articles/tesla-grants-elon-musk-24-billion-to-29-billion-stock-award-11632889727 [5] https://www.nytimes.com/2021/09/28/business/tesla-elon-musk-stock-grant.html
- The Tesla board's decision to award Elon Musk a substantial stock grant, worth between $24 billion and $29 billion, demonstrates their commitment to both Musk's future role in the company's business and technology, as well as their aspirations for the continued investing in the electric vehicle sector.
- Amidst the ongoing geopolitical turmoil, the grant's contingency on Musk's continued leadership and the board's coziness with him raises questions about governance safeguards and financial transparency, particularly in the face of the expanding influence of technology in global business and finance.
