Tesla shareholders have overwhelmingly approved a compensation package for CEO Elon Musk that could be worth as much as one trillion dollars in company shares. More than seventy-five percent of shareholders who participated voted to approve the plan, which is in line with the amount of support Musk has received for past pay packages. As the result was announced, shareholders in the room at Tesla’s Austin, Texas factory began chanting his name.
Flanked by dancing Optimus robots, Musk said that what the company is about to embark upon is not merely a new chapter for the future of Tesla, but a whole new book. Under the deal, Musk will not be awarded one trillion dollars right away, nor will he receive a salary. However, he stands to make hundreds of billions of dollars and gain more control of Tesla if he helps the company achieve a number of milestones and boost its profits along the way. Some of these hurdles will be difficult to clear. Many are simply watered down versions of promises Musk has made for years.
The pay package is broken into twelve tranches covering operational, adjusted profit, and market capitalization goals. Each one gives more shares to Musk if those goals are reached. For instance, Tesla, which today has a market capitalization of about one and a half trillion dollars, will need to steadily increase that valuation and hit eight and a half trillion dollars in a decade.
The vote followed two months of aggressive campaigning by Tesla, its board of directors, and many of its executives. The company repeatedly fired off public appeals for shareholders to approve the package. Chairwoman Robyn Denholm, who is typically media-shy, did multiple interviews with major news outlets and had lost some of her voice before addressing investors at the meeting. Tesla even ran television advertisements about the vote, something it does not do for its cars.
Denholm stated that Tesla is at an inflection point and that the last year has been a critical one in the company’s history. Musk encouraged shareholders to approve the package because he claimed it was the easiest way to hand him more voting control over the company. He currently owns around fifteen percent, but he has threatened multiple times to leave Tesla if he does not wind up with around twenty-five percent control. He said that amount would insulate him from being pushed out and losing control of the robot army Tesla is building.
Tesla stumped for the package in part by holding up the company’s Master Plan 4 as a visionary statement for where Musk can lead things. That document, released in September, was gauzy and unspecific, a criticism Musk even agreed with. He claimed Tesla would add more specifics to the plan just a few days after it was released, but nothing has changed in the intervening months.
Tesla’s board of directors put this pay package forward in large part because the previous plan from 2018, worth around fifty-six billion dollars, was struck down by Delaware’s Chancery Court last year. A judge ruled the company was not transparent about the negotiation process. Tesla has appealed the decision. Earlier this year, Tesla handed Musk twenty-nine billion dollars in shares to make up for the loss of the 2018 package, but said it would essentially void that amount should Tesla win on appeal. This story is developing.