Tesla’s annual meeting in Austin, Texas, was nothing short of electric, with shareholders approving a massive $1 trillion pay package for CEO Elon Musk. The proposal, which was approved with over 75% support, is one of the largest corporate pay packages in history. Musk, who is already the world’s richest person, could receive the payout if Tesla achieves a series of ambitious targets over the next decade.
The pay package is structured around 12 tranches, each tied to specific operational and market capitalization goals. To receive the full payout, Tesla’s market capitalization would need to increase from its current $1.5 trillion to $8.5 trillion, with milestones including delivering 20 million vehicles, achieving 10 million active Full Self-Driving subscriptions, and producing 1 million Optimus humanoid robots.
Musk’s leadership was a key factor in the vote, with many shareholders backing him despite concerns over the package’s size and potential dilution. “I super appreciate it,” Musk said, flanked by dancing Optimus robots on stage. “What we’re about to embark upon is not merely a new chapter of the future of Tesla, but a whole new book”.
The approval marks a significant win for Musk, who had threatened to leave Tesla if the package wasn’t approved. He currently owns around 15% of the company and wants to increase his stake to around 25% to maintain control over the company’s direction.
Tesla’s board of directors had argued that the package was necessary to keep Musk focused on the company’s ambitious goals, including becoming a leader in autonomous driving and artificial intelligence. Chairwoman Robyn Denholm said Musk’s leadership was “crucial” to the company’s success.
The vote comes after a contentious period for Tesla, with sales declining and Musk’s political views drawing criticism. However, many shareholders appear to be backing Musk’s vision for the company’s future, including its push into robotics and AI.
The pay package has drawn criticism from some investors and proxy advisers, who argue that it’s too large and doesn’t provide adequate accountability. Norway’s sovereign wealth fund, which holds a 1.2% stake in Tesla, voted against the package, citing concerns over dilution and governance.
Despite the controversy, many analysts believe the package is a necessary incentive to keep Musk focused on Tesla’s goals. “If Musk does get the $1 trillion, shareholders will have done very nicely indeed,” said Matt Britzman, senior equity analyst at Hargreaves Lansdown.
The approval of the pay package marks a new chapter in Tesla’s story, with Musk at the helm driving the company towards its ambitious goals. Whether the company can achieve these targets remains to be seen, but one thing is certain – Tesla is in for an exciting ride.
As Musk himself said, “I think we have a very good chance of being the most valuable company in the world.” Only time will tell if he can make it happen.
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