News

Tesla shareholders have approved a massive pay package for CEO Elon Musk that could reach $1 trillion.

The pay package – crafted to ensure Mr Musk’s continued service to the electric vehicle manufacturer as it pursues breakthrough technology on AI and robotics – won more than 75% support from shareholders, a Tesla official said at the company’s annual meeting.

Shares of Tesla rose about 1% in after-hours trading on Wall Street last night.

The shareholders vote, analysts have said, is a positive for Tesla’s stock, whose valuation hangs on Mr Musk’s vision of making vehicles drive themselves, expanding robotaxis across the US and selling humanoid robots.

Mr Musk took to the stage in Austin, Texas, along with dancing robots.

“What we are about to embark upon is not merely a new chapter of the future of Tesla, but a whole new book,” he said.

“This really is going to be quite the story.”

Shareholders also reelected three directors on Tesla’s board and voted in favour of holding annual elections for all board members and a replacement pay plan for Mr Musk’s services because a legal challenge has held up a previous package.

“Other shareholder meetings are like snoozefests, but ours are bangers,” Mr Musk said. “I mean, look at this. This is sick.”

Shareholders voted in favour of Tesla investing in Mr 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 Mr 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 Mr Musk could quit if the pay package was not approved.

Under the new package, Mr Musk could earn as much as $878 billion in Tesla stock over ten years.

He could be given as much as $1 trillion in stock but will have to make some payments back to Tesla.

The vote allays investor concern that Mr 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 nearly $1 trillion package benefits shareholders in the longer run as Mr Musk must ensure Tesla achieves a series of milestones to get paid.

Goals for Mr Musk over the next decade include the company’s delivering 20 million vehicles, having one million robotaxis in operation, selling one million robots and earning as much as $400bn 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.

Article Source – Tesla shareholders approve $1tn pay package for Elon Musk

Copyright and Related Rights Act, 2000