Tesla CEO Elon Musk received shareholder approval for a record-breaking compensation package valued at about $1 trillion, the largest executive pay deal in corporate history. The vote – supported by more than 75% of investors, underlined their confidence in Musk’s ambition to remake Tesla into an AI and robotics powerhouse.
The approval came at Tesla’s annual meeting at its Austin, Texas factory – an extravaganza featuring dancing robots and Musk promising a new era for the company. “What we are about to embark upon is not merely a new chapter of Tesla, but a whole new book,” he told cheering shareholders.
A High-Stakes Vote
The deal connects Musk’s compensation with Tesla’s performance, where 12 stock award tranches are linked to ambitious targets, which range from having a market cap of $2 trillion to attaining milestones like 20 million vehicle deliveries, 1 million robotaxis, and 1 million humanoid robots in operation.
There’s one caveat, however: the famously hard-charging CEO does not get a dime extra unless Tesla soars to $8.5 trillion in valuation, more than five times its current worth. He earns 1% in additional stock for each milestone, which could boost his stake from 13% to 25%. https://www.indmoney.com/blog/us-stocks/elon-musk-pay-package-of-1trillion-approved
Investor Divide
While proxy advisers Glass Lewis and ISS recommended votes against the plan, citing excessive cost, the board said it was worth it to retain Musk – who they said could make xAI and SpaceX distractions for the entrepreneur.
The plan – opposed by some major investors, including Norway’s sovereign wealth fund, but others defended it as a long-term bet on Tesla’s innovation in AI and autonomous driving.
“If completed, these tranches follow strong improvements in Tesla’s revenue growth,” said Brian Mulberry, senior client portfolio manager at Zacks Investment Management.
AI, Robotaxis, and “Robot Army”
Musk outlined audacious plans for the company’s future, including the Cybercab-self-driving two-seater robotaxi due to enter production in April and the next-generation Roadster. He even teased a plan to develop a “gigantic chip fab” to make AI processors and intimated that Intel might be a collaborator.
The package also would give Musk more voting power in Tesla, which analysts say is a big motivator for the billionaire, whose interest he says lies more in influence and innovation than in cash.
Broader Implications
Tesla shareholders also voted for investments in Musk’s xAI startup, though the number of abstentions showed investors are cautious about potential conflicts of interest. The expanded control for Musk could help Tesla maintain its AI edge, say analysts, but it also raises governance concerns.
“Investors will want to see guardrails to ensure there’s not too much mixing of businesses,” said Jessica McDougall of Longacre Square Advisors.
The Road Ahead
Tesla’s valuation must increase from $1.5 trillion today to $8.5 trillion for Musk to see the full payout-which works out to $275 million in stock value every day for a decade. Skeptics abound when it comes to hitting all the targets, but few question whether Musk can move the markets with his ambitious goals.
“Whether this growth offsets dilution, or simply gives Elon his wish of shaping the future of AI, remains to be seen,” Mulberry added. As the shareholders cheered, Musk summed up the atmosphere: “Other shareholder meetings are snoozefests — ours are bangers.”
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