Tesla shareholders have overwhelmingly approved a compensation package for Chief Executive Officer Elon Musk that could be worth $1 trillion in Tesla stock.
More than 75% of participating shareholders voted to approve the plan, which is in line with the amount of support Musk has received for past compensation packages. When the results were announced, shareholders in a room at Tesla’s Austin, Texas, factory began chanting “Elon! Elon!”
“What we’re embarking on now, with a dancing Optimus robot at his side, is not just a new chapter in Tesla’s future, it’s a whole new book,” Musk said Thursday.
The deal does not immediately give Musk $1 trillion. I can’t even receive a salary. But if he can help Tesla reach milestones and increase profits in the process, he could earn hundreds of billions of dollars and further increase Tesla’s dominance. Some of those hurdles are difficult to clear. But many of them are simply watered down versions of what Musk has promised for years.
The compensation package is divided into 12 tranches, covering operating, adjusted profit and market capitalization targets, with each tranche giving Musk more equity if the targets are met. For example, Tesla’s market capitalization is currently around $1.5 trillion, but it needs to steadily increase its valuation to reach $8.5 trillion in 10 years.
The vote came after two months of aggressive campaigning by Tesla, its board of directors, and numerous executives. The company repeatedly called on shareholders to approve the package. Chairman Robin Denholm, usually media-shy, lost some of her voice as she gave multiple interviews with major news outlets before addressing investors at Thursday’s meeting. Tesla even aired TV ads about voting, something it doesn’t do with its cars.
“Tesla is at an inflection point. I think I’ve said it 3,000 times in the last few weeks, but last year was an important year in our history,” Denholm said Thursday.
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Musk encouraged shareholders to approve the package. That’s because it’s the easiest way to give more voting rights to the company, he argued. He currently owns about 15% of the company, but has threatened (on multiple occasions) to leave Tesla unless he gains control of about 25%. Musk said that amount would protect him from being forced out or losing control of the “robot army” Tesla is building.
Tesla stumbled over the package, in part because the company’s Master Plan 4 was a statement of its vision for where Musk could lead things. The document, released in September, was flimsy and unspecific, but Musk agreed with the criticism. He claimed that Tesla would add more specifics just days after announcing the “plan,” but nothing has changed in the months since.
Tesla’s board brought forward the pay package largely because an earlier plan from 2018 worth about $56 billion was struck down by a Delaware Chancery Court last year after a judge ruled the company had not been transparent about its negotiation process. Tesla appealed this decision.
Earlier this year, Tesla handed Musk $29 billion in stock to offset losses on the 2018 package, but said that amount would effectively be nullified if Tesla wins on appeal.
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