Tesla Pay Packages: Elon Musk's Future is Being Voted On

On Thursday, Tesla shareholders will decide on a massive pay package aimed at keeping Elon Musk long enough to achieve some revolutionary innovations in the technology field.

Musk speaks boastfully about Tesla's engineering expertise in artificial intelligence, autonomy, and robotics outpacing rival tech giants. With this unique package based on performance-related requirements, the amount Musk can receive could rise up to $1 trillion.

The Chair of the Tesla Board, Robin Denholm, has appeared on CNBC and other outlets to defend this plan, demonstrating their ongoing support for Musk. This support continues despite criticism that Musk’s close ties with far-right political figures have negatively impacted sales. In a message dated October 27, Denholm emphasized, “Without Elon, Tesla could experience a significant loss of value. Our company may not remain valuable in pursuit of redesigning the fundamental building blocks of mobility, energy, and labor.”

Musk has indicated that he may leave Tesla or take a more background role if his stake does not increase. This package is expected to allow Musk's stake to rise from 12% to over 25%.

In a conference call, Musk stated, "I’m not going to spend this money. I just want to have at least a strong influence on it if we build this robot army." The voting results are expected to be announced at Tesla's annual shareholder meeting on Thursday, which will take place at the company’s factory in Austin, Texas.

Anti-Musk protesters plan to hold a demonstration outside the Tesla gigafactory that day. At a recent protest in Austin, activist Ethan McBride said, “A trillion dollars is a lot for any person, no matter the circumstances,” calling the package a “tool to enrich someone who is undermining our democracy.”

While Musk's net worth exceeds $500 billion, he is currently listed as the richest person in the world according to Forbes's real-time billionaire rankings. To receive the full pay package, Tesla must achieve 12 milestones related to its market value. The first tranche will be granted if Tesla's market value reaches $2 trillion.

The package is also tied to certain operational profit and product targets, such as the delivery of 20 million Tesla vehicles. It aims to ensure Musk remains at Tesla for at least seven and a half years.

Musk has described Tesla's potential growth as nearly limitless, stating in July, "Tesla will be the most valuable company in the world." While Musk's successes with Tesla, SpaceX, and other ventures have impressed many, critics argue that the company has been slow to introduce new models and that Musk often backs down or fails to meet challenging targets.

The pay proposal has been criticized by consulting firms such as Glass Lewis and Institutional Shareholder Services (ISS). An ISS analysis dated October 17 criticized the justification for the potential earnings, noting that Musk’s financial interests are already closely tied to Tesla's future. It pointed out that the package's unprecedented value could eliminate the need for all targets to be met.

Norway's sovereign fund, one of Tesla's top 10 shareholders, announced this week that it would vote against the package. Norges Bank Investment Management stated on its official website that "while we appreciate the significant value created under Musk's visionary role, we express our concerns regarding the total size of the award, dilution, and the lack of management of key person risk."

Others voting against the package include New York State Comptroller Thomas DiNapoli. Florida state officials have described the package as the "gold standard" for executive compensation, referring to Musk's track record in value creation.