Elon Musk’s $878 billion Tesla pay plan wins approval
Tesla CEO Elon Musk scored a major victory as shareholders approved a pay package worth US$878 billion over the next decade, confirming his vision of transforming the EV maker into an AI and robotics behemoth.
Shares of Tesla rose nearly 1 percent in after-hours trading. The proposal was accepted with over 75 percent support.
Analysts say the vote is positive for Tesla shares and that their valuation is tied to Musk’s vision of enabling vehicles to drive themselves, expanding robotexy across the US and selling humanoid robots; even though his far-right political rhetoric has hurt the Tesla brand this year.
Musk appeared on stage in Austin, Texas, with dancing robots. “What we are about to begin is not just a new chapter in the future of Tesla, it is a whole new book,” he said. “This is going to be a really pretty big story.” Shareholders also re-elected three directors on Tesla’s board and voted in favor of holding annual elections for all board members and a new compensation plan for Musk’s services because a legal challenge blocked an earlier package.
“Other shareholder meetings are like procrastination raves, but ours are very loud,” Musk said. “I mean, look at this. This is disgusting.”
Shareholders voted for Tesla to invest in Musk’s artificial intelligence startup xAI, but there were also many abstainers.
Although conflict of interest concerns have been raised over Tesla’s possible investment in xAI, the move appears to be of great benefit to both companies, as the electric vehicle maker’s self-driving ambitions depend on critical AI capability and xAI stands to gain from a major customer like Tesla.
Musk was widely expected to win, as the billionaire was allowed to exercise full voting rights on his roughly 15 percent stake after the automaker moved from Delaware to Texas. Some major investors, including Norway’s sovereign wealth fund and proxy firms Glass Lewis and Institutional Shareholder Services, opposed the plan, saying the pay could reduce shareholder value.
Tesla’s board of directors had said that Musk could resign if the salary package was not approved.
According to the new package, Musk can earn up to $878 billion from Tesla shares in 10 years. He may be given up to $1 trillion in stock, but he will have to make some payments to Tesla.
The vote allayed investor concerns that Musk’s work in politics as well as running his other companies, including rocket maker SpaceX and xAI, were being diluted. The board and many supportive investors said the nearly $1 trillion package benefits shareholders in the long run because Musk must ensure Tesla hits a series of milestones to get paid.
Musk’s goals for the next decade include the company delivering 20 million vehicles, having 1 million robotaxis in operation, selling 1 million robots and making underlying profits of up to $400 billion. However, in order to be paid, Tesla’s share value must increase together, first from the current 1.5 trillion dollars to 2 trillion dollars, and then to 8.5 trillion dollars.
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