Tesla shareholders have overwhelmingly approved a compensation package for CEO Elon Musk that could be worth as much as $1 trillion in company stock.
More than 75% of shareholders who participated voted in favor of the plan, matching the level of support Elon Musk has received for his past salaries. When the result was announced, shareholders in the Tesla factory hall in Austin, Texas, began chanting, “Elon! Elon!”
Flanked by dancing Optimus robots, Musk said Thursday that “what we’re about to embark on is not just a new chapter in Tesla’s future, but a whole new book.”
Under this agreement, Musk will not receive $1 trillion immediately. He will also not receive a salary. But he could make hundreds of billions of dollars and take more control of Tesla if he helps the company hit a certain number of milestones and increase profits along the way. Some of these obstacles will be difficult to overcome. Many, however, are just watered-down versions of promises Musk has been making for years.
The salary package is divided into 12 tranches – covering operational, adjusted profit and market capitalization targets – each giving Musk more shares if those targets are met. For example, Tesla, which has a market capitalization of around $1.5 trillion today, will need to steadily increase that valuation to reach $8.5 trillion within a decade.
The vote follows two months of aggressive campaigning by Tesla, its board of directors and many of its executives. The company has repeatedly made public appeals for shareholders to approve the project. Chairman Robyn Denholm, who is generally media shy, gave several interviews with major media outlets and had lost some of her voice before addressing investors at Thursday’s meeting. Tesla even ran TV ads about voting – something it doesn’t even do for its cars.
“Tesla is at an inflection point — I think I’ve said this 3,000 times in the last few weeks — and the last year has been critical in our history,” Denholm said Thursday.
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Musk encouraged shareholders to approve the plan because he said it was the easiest way to give him more control over the company. He currently owns about 15%, but has threatened (repeatedly) to leave Tesla if he doesn’t end up with control of about 25%. That amount would prevent him from being kicked out and losing control of the “robot army” Tesla is building, Musk said.
Tesla has been hesitant to accept the package in part by presenting the company’s “Master Plan 4” as a visionary statement for where Musk can lead things. That document, released in September, was vague and imprecise — a criticism Musk even agreed with. He claimed that Tesla would add more details to the “Plan” just days after its release, but nothing has changed in the months since.
Tesla’s board proposed the pay plan largely because the previous 2018 plan (worth about $56 billion) was struck down by the Delaware Chancery Court last year, after a judge ruled that the company had not been transparent about the negotiation process. Tesla appealed the decision.
Earlier this year, Tesla handed Musk $29 billion in stock to make up for the loss of the 2018 package, but said it would essentially wipe out that amount if Tesla wins on appeal.
