Tesla Shareholders Approve Elon Musk's $1 Trillion Pay Package

Tesla CEO Elon Musk's $1 Trillion Pay Package Approved

Tesla shareholders have given resounding approval to a new compensation plan for CEO Elon Musk, potentially valued at up to $1 trillion in company stock.

Shareholder Support and Celebration

Over 75% of participating shareholders voted in favor of the plan, mirroring the level of support Musk has historically received for his remuneration. A celebratory atmosphere erupted at Tesla’s Austin, Texas facility as the results were announced, with attendees chanting “Elon! Elon!”

Musk, appearing alongside performing Optimus robots, stated that the company is poised to begin “not merely a new chapter of the future of Tesla, but a whole new book.”

Details of the Compensation Plan

The agreement doesn't involve an immediate payout of $1 trillion, nor does it include a standard salary for Musk. However, he stands to gain substantial wealth – potentially hundreds of billions of dollars – and increased control over Tesla if specific company objectives are met and profitability is enhanced.

Achieving these goals will present challenges, though many align with long-standing commitments made by Musk. The pay package is structured around 12 tranches.

These tranches are tied to operational performance, adjusted profits, and market capitalization targets, with each milestone unlocking additional shares for Musk. For example, Tesla, currently valued at approximately $1.5 trillion, will need to consistently grow its valuation to reach $8.5 trillion within the next decade.

Aggressive Campaign for Approval

The vote followed an intensive two-month campaign led by Tesla, its board, and key executives. The company actively sought shareholder approval through public appeals.

Chairwoman Robyn Denholm, known for her reserved public presence, engaged in numerous interviews with prominent news organizations and addressed investors at Thursday’s meeting, despite experiencing vocal strain. Tesla even invested in television advertising to promote the vote – a strategy not typically employed for its vehicles.

Denholm emphasized that “Tesla is at an inflection point” and highlighted the significance of the past year in the company’s history.

Voting Control and Future Plans

Musk advocated for the package’s approval, asserting it was the most direct route to securing greater voting control within the company. He currently holds around 15% of Tesla’s stock.

He has repeatedly indicated his potential departure from Tesla if he doesn’t attain approximately 25% control, which he believes would safeguard him from being ousted and preserve his leadership of the company’s “robot army.”

The company promoted the package by showcasing its “Master Plan 4” as a vision for future direction under Musk’s leadership. This document, released in September, was criticized for its lack of detail – a critique Musk acknowledged.

He promised to elaborate on the “Plan” shortly after its release, but no further specifics have been provided.

Background and Legal Challenges

The current pay package proposal arose after a previous plan from 2018 (valued at around $56 billion) was invalidated by the Delaware Chancery Court last year. The court cited a lack of transparency in the negotiation process.

Tesla has filed an appeal against this decision.

Earlier this year, Tesla issued $29 billion in shares to Musk as compensation for the loss of the 2018 package, with the understanding that this amount would be rescinded if Tesla prevails in its appeal.