NEW YORK – Tesla shareholders on Thursday overwhelmingly endorsed a massive pay package for CEO Elon Musk that could reach $1 trillion, marking the latest demonstration of the entrepreneurial billionaire’s resonance with investors.
The compensation package – crafted to ensure the South African born Musk’s continued service to Tesla as the company pursues breakthrough technology on artificial intelligence and robotics – won more than 75 percent support from shareholders at the company’s annual meeting.
“I’d like to just give a heartfelt thanks to everyone who supported the shareholder votes,” a euphoric Musk told the gathering held at Tesla’s factory in Austin. “I super-appreciate it.”
Cheers of “Elon” broke out after the vote result was announced, highlighting the CEO’s continued support among investors despite his controversial political stances.
Record-breaking compensation deal
The package aims to ensure Musk stays at Tesla for at least seven-and-a-half years and would lift his holding in the electric vehicle company from about 12 percent to potentially more than 25 percent.
Musk has described Tesla’s potential growth as nearly boundless, saying in July that it “will be the most valuable company in the world by far” if it delivers on envisioned advances on autonomous driving and artificial intelligence.
However, the Tesla CEO has hinted he could leave the company or take a back seat if his ownership share is not raised enough to give him the influence over its future that he desires.
Board defense and criticism
In urging shareholders to back the proposal, Tesla Chair Robin Denholm argued keeping Musk was essential to Tesla’s future, warning the company’s stock could dive if he exited. The board has dismissed criticism that Musk’s embrace of contentious political figures, including President Donald Trump, has weighed on sales.
The approval comes despite opposition from proxy advisory firms Glass Lewis and Institutional Shareholder Services (ISS), which criticized the unprecedented scale of the compensation.
“Elon Musk just got one trillion dollars for failure,” said Tesla Takedown, an activist group that rallied against the plan. “Sales are down, safety risks are up and his politics are driving customers away. This isn’t leadership — it’s the world’s most expensive participation trophy.”
Performance milestones
Musk must hit 12 milestones related to market capitalisation to receive the full pay package. The first tranche would be available when Tesla reaches $2 trillion in market value, up from its current $1.5 trillion.
The plan also involves a series of operating profit and product goals, including the delivery of 20 million Tesla vehicles.
Market response
Wedbush analyst Dan Ives said the sweeping vote in favor of Musk cements his position as “the AI Revolution takes hold giving us greater confidence in the Tesla story moving forward.”
Musk, with a net worth of more than $500 billion, is already the world’s richest person according to Forbes’s real-time list of billionaires.
The latest compensation plan follows years of legal challenges to a previous 2018 deal worth about $55.8 billion, which has been repeatedly blocked by a Delaware court in response to shareholder litigation.
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