- Tesla shareholders have voted to approve a new US$1 trillion compensation package for the company’s CEO, Elon Musk.
- If Musk hits all the operational market value milestones in the deal, it could see him become the world’s first trillionaire over the next 10 years.
Tesla shareholders have voted to approve an eye-watering US$1 trillion (AU$1.5t) compensation package, in the form of company shares, for the company’s CEO, Elon Musk. Musk’s new compensation plan is the largest ever awarded to a corporate leader.
The enormous pay deal was approved on Thursday at Tesla’s annual general meeting. The deal will potentially see Musk become the world’s first ever trillionaire and increase his ownership stake in Tesla to 25%.
It follows weeks of campaigning from the company’s board, Musk himself, and high-profile retail investors to muster support for the deal.
The Tesla CEO threatened to spend less time on Tesla, or leave the company entirely, if he wasn’t able to take more control. Musk said during the company’s third-quarter earnings call in October that he needed the reassurance of greater voting influence to “feel comfortable building a robot army here.”
There needs to be enough voting control to give a strong influence, but not so much that I can’t be fired if I go insane.
Elon Musk, Tesla CEOBoard Chair Robyn Denholm had warned Tesla shareholders that Musk was essential to the company’s future and they couldn’t afford for him to leave.
“Without Elon, Tesla could lose significant value, as our company may no longer be valued for what we aim to become,” she said.
With the pay package now approved, it appears Musk is set to lead the electric vehicle manufacturer for at least the next 10 years as it looks to harness the power of AI to fulfil its self-driving vehicle promises.
Underlining the importance of AI to Tesla, shareholders also voted in favour of the company investing in Musk’s artificial intelligence startup, xAI. Despite concerns around conflicts of interest, many shareholders now believe Tesla will benefit from a close relationship with an AI company.
“What we are about to embark upon is not merely a new chapter of the future of Tesla, but a whole new book,” Musk told a group of shareholders following the deal’s approval.
While Musk’s new pay package saw widespread shareholder support, with 75% voting in favour, several large investors, including the Norwegian Sovereign Wealth Fund and proxy firms Glass Lewis and Institutional Shareholder Services, opposed Musk’s pay deal, saying it could actually decrease shareholder value.
Related: Elon Musk’s xAI Teases AI-Generated Video Game Coming Next Year
Compensation Tied to Hitting Value And Operational Milestones
To actually receive the full US$1 trillion package, Musk will have to hit a series of market value and operational milestones, including massively expanding the company’s market cap, breathing new life into car sales and growing Tesla’s Robotaxi and robotics ventures.
If Musk is able to hit the milestones, he’ll gradually unlock larger ownership stakes in Tesla, maxing out when he gets the market value up to US$8.5 trillion (AU$13.1t). The company’s current value is US$1.4 trillion (AU$2.2t).
Related: WEF President Warns of Potential AI and Crypto Bubbles Amid $500B Tech Investment Surge
The operational milestones Musk needs to hit are:
- Delivering 20 million Tesla vehicles;
- Attracting 10 million active subscriptions for the add-on driver-assistance service, Full Self-Driving;
- Delivering 1 million Tesla robots;
- Putting 1 million Tesla robotaxis in commercial operation; and
- Eight separate profitability milestones.
Credit: Source link
