Tesla Shareholders Approve $1 Trillion Pay Package For Musk
Tesla Inc. shareholders approved a $1 trillion compensation package for Chief Executive Officer Elon Musk, the largest payout ever awarded to a corporate leader.
More than 75% of the votes cast were in favor of the unprecedented pay plan, the company said Thursday at its annual meeting. The outcome caps a weekslong campaign by the electric vehicle maker’s board, its CEO and prominent retail investors to build support.
The Pay Agreement
The pay agreement clears a path for Musk, the world’s richest person, to become the first-ever trillionaire and expand his stake in Tesla to 25% or more over the next decade. To achieve the full payout, he’ll have to deliver on targets to significantly expand Tesla’s market value, revive its flagging car business and get the fledgling robotaxi and Optimus robotics efforts off the ground.
“It’s not just a new chapter for Tesla, it’s a new book,” Musk said at the shareholder meeting, wearing a black Tesla jacket as he strode the stage in front of a cheering crowd. “And that new book is massively increasing vehicle production and ramping up Optimus production faster than anything’s ever been ramped up before in human history.”
Future Plans
The compensation vote was pivotal for Tesla, after Musk suggested he could step down or spend more time with his other companies if he didn’t get greater control over the carmaker. He’s now likely to remain at the helm as Tesla pursues an ambitious agenda built around driverless vehicles and artificial intelligence.
Tesla shares rose less than 1% as of 7:16 p.m. in postmarket trading Thursday in New York, paring an earlier gain of as much as 3.4%. The stock was up 10% this year through Thursday’s close, narrowly trailing the 14% advance in the S&P 500 Index.
Musk teased several lofty goals as the company looks to 2026 and beyond.
The CEO, who has led the EV maker since 2008, said that Tesla might end up building a chip factory to get the volume it needs, even as the company works with established suppliers such as Samsung and TSMC.
“Even when we extrapolate the best case scenario for chip production from our suppliers it’s still not enough,” Musk said. “So I think we may have to do a Tesla terafab. It’s like giga but way bigger.”
He said next year will focus on Optimus, the Semi truck and the Cybercab. Musk expects production of Cybercab will be roughly in line with regulatory approval. “I’d like to thank Waymo for paving the path here. It’s very helpful,” he added.
Musk said Tesla has aspirational goals to boost vehicle production volume by about 50% by the end of next year.
Aggressive Effort
The pay package was widely expected to pass, even after several prominent investors came out in opposition, including Norway’s Norges Bank Investment Management, Tesla’s ninth-largest holder. Proxy advisers Institutional Shareholder Services and Glass Lewis recommended investors reject the compensation plan, citing concerns with its magnitude and its potential to dilute other shareholders’ ownership.
The board waged an aggressive effort to garner support, featuring meetings with large institutional shareholders and a series of media appearances by Chair Robyn Denholm. In interviews with Bloomberg News, Denholm cast the vote as crucial to Tesla’s future, which needs an engaged Musk to achieve its goals.
Musk himself sought to rally support, using a portion of Tesla’s recent earnings call to lay out why he wasn’t comfortable building a “robot army” unless he owns a quarter of the company.
Schwab Asset Management earlier this week pledged to back the pay proposal after a number of prominent retail shareholders said on social media that they would move funds out of brokerages that voted in opposition. Several other institutional investors, including Florida’s State Board of Administration, said they would vote for the package.
“Even with the new pay package, there are significant hurdles” to unlocking the payout, including profitably scaling Tesla’s operations and delivering many robots and robotaxis, said Wedbush Securities analyst Dan Ives, a longtime Tesla bull. “Now it’s about driving the most important chapter in Tesla’s history with an autonomous future ahead.”
Impact on Indian Investors
For Indian investors looking to invest in the US stock market, this development can have significant implications. As Tesla continues to push the boundaries of innovation and technology, its stock price may see significant fluctuations. Indian investors can consider investing in Tesla through Indian brokerages offering US stock trading or by investing in US stock market index funds.
Moreover, Indian investors can also consider investing in electric vehicle stocks in India as the country is also witnessing a growing demand for electric vehicles. Companies like Tata Motors and Mahindra and Mahindra are already making significant investments in the electric vehicle space.