Tesla Inc shares have seen an upward trend in early Monday trading following the approval of CEO Elon Musk’s compensation package. This move has sparked significant interest, with the company announcing an award of 96 million shares of restricted stock to Musk.
Key Points to Know
- Tesla approved an award of 96 million shares of restricted stock to Musk under the company’s 2019 Equity Incentive Plan.
- The payment plan was approved by the board on Sunday, marking a significant development in Musk’s compensation.
- Earlier this year, Musk appealed a court ruling that previously voided his compensation package, highlighting the complexities surrounding his pay.
Statement from Tesla’s Special Committee
The special committee formed to review Musk’s compensation stated:
“While we recognize that Elon’s business ventures, interests, and other potential demands on his time and attention are extensive and wide-ranging, … we are confident that this award will incentivize Elon to remain at Tesla and focus his unmatched leadership abilities on further creating shareholder value for Tesla shareholders.”
Reaction from Board Members
Robyn Denholm, chair of Tesla’s board, and Kathleen Wilson-Thompson, a board director, expressed their support for Musk’s compensation package, emphasizing that retaining him is “more important than ever before.” They believe Musk has delivered on the transformative growth required for him to earn the payments related to the incentive plan.
Analyst Insights
Wedbush’s Dan Ives commented that the pay package sets the company up to keep Musk until at least 2030, citing Musk as Tesla’s top asset as it focuses on becoming an AI-first company. Wedbush maintained an Outperform rating on Tesla and reiterated a price target of $500.
Market Performance
Despite Tesla’s China-made vehicle deliveries decreasing 8.4% year-over-year in July, the company’s shares were up 0.58% at $304.40. Tesla has reported two consecutive quarters of declining vehicle sales, but Musk continues to steer the company toward autonomous vehicles and humanoid bots.
Technical Analysis
Tesla shares are currently trading below their 50-day moving average, indicating a bearish short-term trend. However, the stock is above the 100-day moving average, suggesting potential support at this level. Resistance may be encountered around the 200-day moving average, which could limit upside momentum in the near term.
Valuation
With a market cap of $994.70 billion and a P/E ratio of 180.14, Tesla remains one of the most highly valued stocks in the market. The forward P/E of 158.73 indicates expectations for future earnings growth, but such high valuations may pose risks if growth does not materialize as anticipated.