Tesla (TSLA.O) CEO Elon Musk secured shareholder approval on Thursday for the largest corporate pay package in history, a move that endorses his ambitious plan to transform the electric vehicle (EV) maker into a dominant force in AI and robotics.
The proposal received over 75% approval at the company's annual meeting held in Austin, Texas. Musk celebrated this success by taking the stage with dancing robots.
The plan could potentially grant Musk up to $1 trillion in stock over the next ten years. However, the necessary payments lower the net value to around $878 billion.
This vote was crucial for Tesla's valuation, which is significantly dependent on Musk's vision for self-driving cars, a robotaxi network, and the sale of humanoid robots, despite worries that his political statements could affect the brand. The board had cautioned that Musk might depart without the compensation package.
Musk spoke to shareholders, stating that Tesla was entering "a whole new book." He detailed several important future initiatives: commencing production of the Cybercab (a two-seater, steering-less robotaxi) in April, revealing the next-generation Roadster electric sports car, and emphasizing the need for a "gigantic chip fab" for AI chips, hinting at a possible partnership with Intel.
In addition to the compensation package, shareholders also: reelected three directors, voted for annual elections for all board members, approved a new pay plan to replace Musk's previous court-ordered package, and agreed to Tesla investing in Musk's AI startup, xAI, although many abstentions reflected investor concerns about adequate board oversight and the potential blending of businesses.
While some investors including Norway's sovereign wealth fund and proxy firms Glass Lewis and ISS opposed the plan as costly and unnecessary, many others backed it as a strategy to retain Musk and align his pay with shareholder returns. The unprecedented package is contingent upon Musk meeting a series of ambitious operational and valuation targets, ensuring that shareholders gain. These goals include delivering 20 million vehicles, operating 1 million robotaxis, selling 1 million robots, and achieving $400 billion in core profit.
In order for Musk to receive compensation, Tesla's stock must increase from its present value of $1.5 trillion to $2 trillion initially, and eventually reach $8.5 trillion. Each milestone achieved grants Musk 1% of the stock.
Musk expressed that his main interest in the compensation package was the enhanced voting power it would provide him within Tesla, rather than merely the financial aspect, as he plans to launch a "robot army." The result, which was largely anticipated, now eases worries that Musk's attention would completely divert to his other projects, including SpaceX and xAI.
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