Image source, Reuters
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- Author, Lily Jamali
- Author’s title, Technology Correspondent in North America
Tesla shareholders approved a record pay package for CEO Elon Musk that could reach nearly $1 trillion.
The unprecedented deal was approved by 75% of Tesla shareholders who voted at the company’s annual general meeting, held on Thursday.
The deal requires Musk, already the richest man in the world, to dramatically increase the market value of the electric car company over several years. If you meet various goals, you will be rewarded with hundreds of millions of new shares.
The size of the deal is controversial, but Tesla’s board of shareholders argued that Musk could leave the company if it was not approved, and that they could not afford to lose him.
The announcement drew a loud applause from the audience at the meeting in Austin, Texas. Musk took the stage and danced while attendees chanted his name.
“What we are about to embark on is not simply a new chapter in Tesla’s future, but an entirely new book,” he declared.
“Other shareholder meetings are very boring, but ours are a success. Look at this! This is incredible!” Musk exclaimed.
Milestones Musk must achieve in the next decade to maximize his profit include increasing Tesla’s market value from $1.4 trillion (as of today) to $8.5 trillion.
It would also need to put one million autonomous “Robotaxi” vehicles into commercial operation.
Robots and self-driving cars
Image source, Reuters
But his first remarks Thursday focused attention on the Optimus robot, dashing the hopes of some analysts and Tesla watchers who had hoped Musk would focus on revitalizing the company’s electric vehicle business.
“You have to understand what Musk is thinking,” analyst Gene Munster, managing partner at Deepwater Asset Management, wrote in X.
“His ‘new book’ vision starts with Optimus. No word on cars, FSD or robotaxis yet.”
Later, Musk did address FSD, short for full self-driving, saying the company was “almost comfortable” allowing drivers to “text while driving.”
US regulators are investigating Tesla’s self-driving feature after several incidents in which vehicles ran red lights or drove in the wrong direction.
Some of these incidents have caused accidents with injuries and deaths.
Tesla shares rose slightly in after-hours trading.
The company’s sales have plummeted in the year since Musk aligned himself with US President Donald Trump, a relationship that disintegrated a few months ago.
Dan Ives, a technology analyst at Wedbush Securities and a longtime supporter of Musk’s leadership at Tesla, called him the company’s “greatest asset” in a report released after the vote.
“We continue to believe that AI-driven valuation is taking hold and that the path to an AI-driven valuation of TSLA in the next 6-9 months has already begun,” Ives added.
Musk already owned 13% of Tesla shares. Shareholders had twice ratified a pay package worth tens of billions of dollars if he managed to increase the company’s market value tenfold, which he did.
However, a Delaware judge rejected that salary agreement, arguing that members of Tesla’s shareholder board had too close a relationship with Musk.
Tesla moved from Delaware to Texas, and the Delaware Supreme Court is reviewing the trial judge’s decision.
The new pay package was rejected by several major institutional investors, including Norway’s sovereign wealth fund – the world’s largest sovereign wealth fund – and the California Public Employees’ Retirement System (CalPERS) – the largest public pension fund in the United States.
This left Musk more dependent on Tesla’s unusually large volume of retail investors.
Both Musk and his brother Kimbal, who also sits on Tesla’s board of shareholders, had voting rights at Thursday’s meeting.
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