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Tesla (NASDAQ:TSLA) investors have a new wildcard in the mix after a judge invalidated Elon Musk’s compensation package from 2018 that could be worth as much as $55B.
Wedbush Securities analyst Dan Ives called the decision of Delaware judge Kathleen McCormick shocking after investors had largely assumed the case was essentially thrown out. Ives warned that the decision now creates a tornado situation for Tesla’s (TSLA) board with its next moves.
Tesla’s (TSLA) board can decide to appeal the decision or create a new compensation package that supersedes the contested 2018 and let shareholders vote on it at the next shareholder meeting, per Ives. A third option could be to devise a new compensation package that allows Elon Musk to the 25% voting share he has discussed over the past few weeks.
Earlier in January, Musk said he would be uncomfortable growing the electric vehicle maker into a robotics and artificial intelligence leader unless he owned at least 25% of its voting shares, nearly double his current stake. The voting control would be “enough to be influential, but not so much that I can’t be overturned,” Musk wrote on social media platform X. “Unless that is the case, I would prefer to build products outside of Tesla (TSLA).”
Future Fund managing partner and notable TSLA shareholder Gary Black also thinks the adds more uncertainty for the EV stock, but sees a path to rework the compensation package to satisfy investors.
Looking ahead, Tesla (TSLA) could make an official statement in the next few days to respond to the Delaware ruling and give an indication on the Austin-based company’s strategy.
Shares of Tesla (TSLA) fell 2.86% in premarket trading on Wednesday and are now down about 23% for the early part of the year. The EV stock trades below its 100-day and 200-day moving averages.