Tesla grants Elon Musk $29 billion worth of shares despite court ruling

In a significant corporate development, Tesla Inc. awarded its CEO, Elon Musk, 96 million shares of restricted stock valued at approximately $29 billion. This decision has raised eyebrows, especially as it comes just six months after a Delaware judge, Chancellor Kathaleen St. Jude McCormick, mandated the company to revoke Musk's massive pay package. The judge determined that Musk had orchestrated this earlier compensation plan through non-independent negotiations, which called into question the legitimacy of its approval. Despite the legal challenges surrounding Musk's compensation, Tesla proceeded with this grant, stipulating that Musk must first pay the company $23.34 per share for the restricted stock that vests. This exercise price was previously established as part of his 2018 compensation package. The legal ruling that prompted Tesla’s actions stemmed from a lawsuit filed by a Tesla stockholder, who argued against the fairness and independence of Musk’s 2018 pay package, which potentially could have been valued at about $56 billion. The stockholder's claims centered on the assertion that Musk navigated his pay through questionable means, manipulating the board rather than engaging in a transparent or independent review process. While the plaintiff's attorneys sought a recovery amounting to over $5 billion in legal fees, the court determined a more modest fee of $345 million would be appropriate based on their contribution to the ruling. Notably, the board's decision to award Musk these shares occurs at a time when Tesla's stock price has shown volatility, which can impact the overall value of his compensation package. Following the judge's ruling, Musk appealed the decision. Concurrently, Tesla announced the formation of a special committee dedicated to reevaluating Musk's salary as CEO, indicating that the matter remains a contentious and evolving issue within the company. As of the latest updates, Elon Musk's actions and the corporate governance at Tesla continue to be scrutinized and debated in the context of executive compensation practices in Silicon Valley. The outcome of this ongoing narrative may have broader implications for how companies structure their executive pay packages and the extent to which stockholder interests are considered in such decisions.