A new pay package for Tesla Inc. CEO Elon Musk is expected to alleviate one of the factors holding back the price of the electric vehicle company’s shares. According to Wedbush analyst Dan Ives, this move is crucial as the company begins to focus on the AI sector, which is highly competitive for talent.
What Happened
The new pay package comes after Musk made comments about his ownership stake in the electric vehicle company. Tesla filed a Form 8-k with the Board of Directors approving an award of 96 million shares of restricted stock under the company’s 2019 Equity Incentive Plan. This approval was done with the recommendation of a special committee.
Key Points
- The long-term incentive program is expected to motivate Musk as the CEO of Tesla as the company moves to becoming “an AI-first company.”
- The Wedbush analyst maintained an Outperform rating on Tesla with a $500 price target.
- The compensation plan includes a grant that will keep Musk as CEO of Tesla at least until 2030, removing an overhang on the stock.
Analysis
Ives believes that retaining Musk at Tesla is a must as the company focuses on the AI sector. With the AI talent war now fully underway across Big Tech, this move is seen as a strategic decision to keep TSLA’s top asset, Musk, focused on the company’s growth strategy over the coming years. The framework of the plan to increase Musk’s voting control removes an overhang on the stock.
What’s Next
The Tesla Board of Directors must now get this long-term compensation strategy in place prior to the company’s November 6th shareholder meeting. This will address the elephant in the room and remove a significant overhang on the stock. Ives calls the compensation plan an important strategic move by the Tesla Board of Directors to keep Musk as CEO and incentivize him to stay focused on the company.
TSLA Price Action
Tesla stock is up 1.9% to $308.25 on Monday, with a 52-week trading range of $182.00 to $488.54. Tesla stock is down 18.7% year-to-date in 2025.
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