Tesla's CEO, Elon Musk, acquires shares valued at $1 billion for the company
Tesla CEO Elon Musk Buys $1 Billion in Tesla Stock, Aims for Larger Stake
Elon Musk, the CEO of Tesla, made headlines on Friday by purchasing approximately $1 billion worth of Tesla stock. This marks Musk's first open market purchase of Tesla stock since 2020.
The purchase was made at a price between $372.37 and $396.54 per share, and it comes as the company is considering a new compensation package for Musk, worth up to $1 trillion. This potential pay package, if approved, would be the largest in history.
The new compensation package is performance-based and aligns Musk's interests with those of the shareholders. It is subject to shareholder approval, with Jed Dorsheimer, group head of energy and power technologies at William Blair, expecting it to pass with 'flying colors'.
Dorsheimer sees Musk's stock purchase as a clear signal of confidence. Indeed, Tesla shares were up more than 5.3% as of early afternoon following Musk's purchase. Dorsheimer also noted that the stock surged on the news.
The new compensation package is not without precedent. In 2018, Musk was awarded a compensation package worth $56 billion, but this was struck down by a Delaware judge due to concerns about Musk's ties to the board members who approved the deal. A smaller $29 billion award was issued to Musk as a 'good faith' payment on the 2018 compensation plan that's being held up in the courts. The Delaware judge's previous ruling is currently under appeal.
Musk has sought greater voting power and a larger stake in Tesla. As of December, Musk had a roughly 13% stake in the company, representing approximately 12.8% of the company. However, Musk has expressed a desire to control at least 25% of Tesla's voting rights.
The purchase comes at a time when Tesla is transitioning to emphasize artificial intelligence (AI), robotaxis, and robotics. The new compensation package, like the 2018 package, is supported by the board.
In conclusion, Elon Musk's recent purchase of $1 billion in Tesla stock signals his continued commitment to the company and his confidence in its future. The new compensation package, worth up to $1 trillion, is expected to be put to a shareholder vote in the near future.
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