Tesla announced that their shareholders have voted in favor of Elon Musk’s almost $1 trillion pay package. With 75% support, the CEO has been given a green signal for the record-breaking deal, the largest in corporate history. During the company’s annual general meeting at its factory in Austin, Texas, Musk expressed his gratitude to the crowd of shareholders for their unwavering support. The Chief Executive said, “What we’re about to embark upon is not merely a new chapter of the future of Tesla but a whole new book.”
The scale of the pay package had sparked significant criticism, with some shareholders taking opposing sides. Given the magnitude of the payout, it was deemed necessary to hold a referendum on the Tesla CEO as well as his endeavor to set humanoid robots and artificial intelligence as the next cornerstone for the EV brand. This was evident in the appearance of dancing robots on stage at the Thursday meeting. In short, this payout could anticipate a major development in Musk’s executive role, as well as the future of Tesla.
What does Elon Musk’s $1 Trillion Pay Package consist of?
The $1 trillion pay package consists of 12 chunks of Tesla’s stock. The approval of this deal indicates that Musk could gain control of the company by around 25% if the CEO is able to accomplish a series of targets. The net value of the shares is approximately $878 billion, since the compensational plan is organized to exclude the stock’s value on the day the board approved the proposal in early September this year.
Some of the milestones Musk is supposed to achieve in the next 10 years include:
- Delivering 20 million Tesla vehicles
- Securing 10 million subscriptions to Tesla’s Full Self-Driving (FSD) feature
- Deploying 1 million self-driving Robotaxi vehicles for commercial use
- Producing and delivering 1 million robots
- Making up to $400 billion in terms of core profit
- Raising the company’s overall market cap from 1.5$ trillion to $2 trillion, and then to $8.5 trillion
As per the approved compensation plan, Musk will not be receiving a salary during this time period.
Shareholders at Tesla justified the scale of the package as pay for performance by highlighting Musk’s indispensable role in the company’s future. As Tesla attempts to expand beyond the EV market, the CEO’s innovations in the fields of robotics and artificial intelligence are deemed crucial.
And executives hold a similar belief. Robyn Denholm, the company’s chairman, spoke in a recent interview about Musk’s capability: ”Having worked with him now for 11 years, I can say what motivates him is doing things that others can’t do or haven’t been able to do.”
What does the $1 Trillion Pay Package indicate for Tesla’s future?
For each milestone Musk achieves, whether through operational improvements or Tesla’s market value growth, the tech mogul will receive 1% of the company’s stock. This implies that he would still be rewarded with tens of billions of dollars even if he misses some of the goals.
In the event Musk hits all targets, he would be entitled to 12% of Tesla’s stock, which amounts to almost $1 trillion. The exact value of the compensation plan will stay fluid, as the same would fluctuate with the company’s stock prices.
As per The Wall Street Journal, Elon Musk had threatened on social media to exit from the company if the deal was rejected by the shareholders. As a matter of fact, Musk is the biggest shareholder of the firm, with around 15% in his possession.
Simultaneously, his current net worth places him as the richest person in the world, at the time of writing. Hence, this compensation plan is not only the CEO’s motivational tool at the firm but also a reflection of his expanding financial assets.
