Kimbal Musk, a board member at Tesla Inc., has defended the company’s decision to approve a $29 billion compensation package for his brother, CEO Elon Musk. The package, which grants Elon Musk 96 million shares vesting over two years, has faced mounting scrutiny from investors and analysts.
Kimbal Musk Speaks Out In Favor Of His Elder Brother
In a recent appearance on CNBC’s Squawk Box, Kimbal Musk argued that his brother deserves to be paid for his work, citing the fact that he has not received any compensation from Tesla in the past 6 to 8 years. Kimbal Musk noted that independent board members approved the plan, and he believes that Elon Musk’s hard work and dedication to the company warrant a significant payout.
Details of the Compensation Package
The new package, which was approved by a special committee of Tesla’s board, comes with restrictions, including a five-year lockup on vested shares. However, some investors have criticized the package for lacking strict performance targets. The SOC Investment Group, which represents union-backed pension funds, has questioned whether Tesla violated NASDAQ rules by bypassing a shareholder vote.
Analysts and Investors Weigh In
Some analysts, such as Wedbush’s Dan Ives, have praised the decision, saying it “removes an overhang” from Tesla stock and secures Musk’s leadership “at least until 2030.” Investor Gary Black has also echoed this sentiment, calling the package “very favorable for Tesla.” However, others have expressed concerns about the package’s impact on the company’s finances and governance.
Tesla Faces Broader Challenges
The debate over Elon Musk’s pay comes as Tesla faces declining sales in key markets, including a 21% drop in California, and increased competition in the global EV sector. In July, Tesla posted second-quarter revenue of $22.5 billion, marking a 12% decline from the same period last year and falling short of Wall Street’s consensus estimate.
Price Action
Tesla shares rose 6.22% on Friday and added another 0.42% in after-hours trading. Despite short-term pressure, Benzinga’s Edge Stock Rankings show that Tesla maintains an upward trajectory over the medium and long term.
Conclusion
The approval of Elon Musk’s $29 billion compensation package has sparked a heated debate among investors and analysts. While some see it as a well-deserved payout for the CEO’s hard work and dedication, others have expressed concerns about the package’s impact on the company’s finances and governance. As Tesla navigates the challenges of the EV market, the company’s leadership and compensation practices will be under close scrutiny.