A new pay package for Tesla Inc. (NASDAQ:TSLA) CEO Elon Musk could alleviate one of the factors holding back the price of the electric vehicle company’s shares, according to Wedbush analyst Dan Ives in a new investor note.
What Happened: The new pay package comes as Musk made comments over the weekend about his ownership stake in the electric vehicle company.
"Tesla filed a Form 8-k with the Board of Directors approving an award of 96 million shares of restricted stock under the company's 2019 Equity Incentive Plan," Ives said.
The approval was done with the recommendation of a special committee.
Ives said the long-term incentive program should motivate Musk as the CEO of Tesla as the company moves to becoming "an AI-first company."
The Wedbush analyst maintained an Outperform rating on Tesla with a $500 price target.
Ives said parts of the new compensation plan were included in his July three-step list on what the Tesla Board of Directors should do to maintain guardrails and "keep TSLA's most important asset."
"We believe this grant will now keep Musk as CEO of Tesla at least until 2030 and removes an overhang on the stock."
Ives said the compensation issue has been a concern for shareholders once the "Delaware soap opera began," referencing a judge overturning the compensation plan.
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What's Next: Ives said retaining Musk at Tesla is a must as the company focuses on the AI sector, which is highly competitive for talent.
"With the AI talent war now fully underway across Big Tech, we believe this was a strategic move to keep TSLA's top asset, Musk, would stay focused at the company with his priority being to bolster the company's growth strategy over the coming years," he said.
Ives called the compensation plan an important strategic move by the Tesla Board of Directors to keep Musk as CEO and incentivize him to stay focused on the company.
The framework of the plan to increase Musk's voting control removes an overhang on the stock, Ives added.
"While the groundwork is now in place for the next few years, it will be critical for the Tesla Board of Directors to get this long-term compensation strategy in place prior to the company's November 6th shareholder meeting, which would address the elephant in the room and remove a significant overhang on the stock."
TSLA Price Action: Tesla stock is up 1.9% to $308.25 on Monday versus a 52-week trading range of $182.00 to $488.54. Tesla stock is down 18.7% year-to-date in 2025.
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