Tesla CEO Elon Musk won shareholder approval on Thursday for the largest corporate pay package in history as investors endorsed his vision of morphing the EV maker into an AI and robotics juggernaut. The proposal was approved with over 75% support, and Musk bounded to the stage of the company’s annual meeting at its factory in Austin, Texas, accompanied by dancing robots.
Musk, already the world’s richest person, could get as much as $1 trillion in stock over the next decade, although required payments would take the value down to $878 billion. The vote is crucial for Tesla’s future and its valuation, which hangs on Musk’s vision of making vehicles that drive themselves, creating a robotaxi network across the U.S. and selling humanoid robots, even though his far-right political rhetoric has hurt the Tesla brand this year.
“What we are about to embark upon is not merely a new chapter of the future of Tesla, but a whole new book,” Musk told a cheering group of shareholders. Shareholders also reelected three directors on Tesla’s board and voted in favor of holding annual elections for all board members and a replacement pay plan for Musk’s services because a legal challenge has held up a previous package.
“Other shareholder meetings are like snoozefests, but ours are bangers,” Musk said. “I mean, look at this. This is sick.”
Shareholders voted in favor of Tesla investing in Musk’s artificial intelligence startup, xAI, though there were many abstentions.
Although conflict-of-interest concerns have arisen over Tesla’s possible investment in xAI, the move is seen as widely benefiting both companies as the EV maker’s self-driving ambitions hinge on critical AI prowess and xAI would gain from a major customer like Tesla.
A win for Musk was widely expected as the billionaire was allowed to exercise the full voting rights of his roughly 15% stake after the automaker moved to Texas from Delaware. Some major investors had opposed the plan, including Norway’s sovereign wealth fund and proxy firms Glass Lewis and Institutional Shareholder Services, saying the pay could decrease shareholder value.
Tesla’s board had said Musk could quit if the pay package was not approved.
The vote allays investor concern that Musk’s focus has been diluted with his work in politics as well as in running his other companies, including rocket maker SpaceX and xAI. The board and many investors who lent their endorsement have said the record-setting pay package benefits shareholders in the long run as Musk must ensure Tesla achieves a series of milestones to get paid.
“Will the growth offset these concerns of dilution – or – is this just giving Elon his wish of enough influence to shape the future of AI? That remains to be seen,” said Brian Mulberry, a senior client portfolio manager at Zacks Investment Management.
Goals for Musk over the next decade include the company’s delivering 20 million vehicles, having 1 million robotaxis in operation, selling 1 million robots and earning as much as $400 billion in core profit. But in order for him to get paid, Tesla’s stock value has to rise in tandem, first to $2 trillion from the current $1.5 trillion, and all the way to $8.5 trillion. Achieving each step – an operational goal and a valuation milestone – awards Musk 1% of stock. So the plan could still hand Musk tens of billions of dollars even if he falls short of most of its ambitious targets.
If Musk hits all of them, he would be eligible for 12% in stock, or about $1 trillion.
The true value of those shares would be $878 billion because the board wants to pay Musk only for increasing the company’s value. The package is structured to give Musk up to $1 trillion in shares – minus the value of the stock on the day the board passed the proposal in early September. Musk could either pay that amount in cash or accept fewer shares to account for their original value.
The value of the package is always a moving target because it would fluctuate based on changes in the stock price.
Musk has said he is interested in the higher voting stake he would get in Tesla as part of the pay package, more than the money, as he gears up to sell a “robot army.”
