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Investing.com -- According to Wedbush analyst Dan Ives in a note Monday, Tesla’s new pay package for CEO Elon Musk eliminates a major uncertainty for the stock and sets the stage for long-term stability.
In a note published after Tesla (NASDAQ:TSLA) filed an 8-K this morning, Wedbush called the Board’s approval of a 96 million share restricted stock grant “a strategic move” that will help retain Musk as Tesla’s CEO through at least 2030.
The award, recommended by a special committee of disinterested directors, comes under the 2019 Equity Incentive Plan and is equivalent to roughly one-third of the compensation earned under Musk’s 2018 plan.
“This grant will now keep Musk as CEO of Tesla at least until 2030 and removes an overhang on the stock,” Wedbush said. “Musk remains Tesla’s big asset and this comp issue has been a constant concern of shareholders once the Delaware soap opera began.”
According to Wedbush, Musk must pay Tesla $23.34 per share of restricted stock that vests, the same as the 2018 CEO Award’s exercise price. The grant has an accounting fair value of about $23.7 billion.
Wedbush said the package aligns with the firm’s early July recommendation that Tesla’s board “step in to ensure Musk would commit to Tesla over the next few years.”
“With the AI talent war now fully underway across Big Tech, we believe this was a strategic move to keep TSLA’s top asset,” Wedbush wrote. “This framework for Musk’s pay package and greater voting control removes a major overhang on the story.”
Wedbush reiterated its Outperform rating and $500 price target on Tesla.