Under the pay package terms Tesla shareholders are currently voting on, Elon Musk could become the world’s first trillionaire. Chip Somodevilla/Getty Images
As highlighted by CNN
Tesla shareholders may soon give Elon Musk a shot at becoming the world’s first trillionaire – or push him to choose a path outside the company.
The new compensation package will be a key issue at the company’s annual meeting, scheduled for Thursday afternoon. Previously, shareholders typically backed such pay, but this time there is an added risk: in September Tesla said that Musk “is considering other interests” if the package is rejected.
The compensation envisions granting shares in the form of a grant: up to 423.7 million additional shares that Musk could receive over ten years. If Tesla achieves a market capitalization of $8.5 trillion, these shares could be worth around $1 trillion at full vesting potential.
In addition to growing the company’s value over the next decade, the package contemplates achieving a number of operational or financial milestones so that Musk can receive the full options.
To reach an $8.5 trillion market value, Tesla would need to rise about 466% from its current stock price – i.e., surpassing Nvidia’s current valuation, which last week stood at around $5 trillion.
Outlook and Risks
Despite the potential, the company has faced some challenges: sales and profits in the first half of the year declined, and the future prospects are tempered by a reduction in government support for EV sales in the United States.
However, Musk and Tesla’s executives push back on these issues, saying the company is moving from merely selling electric cars to autonomous vehicles, including a robotaxi fleet and humanoid robots.
Shareholders will largely support this because Elon Musk is a key asset for Tesla.
“I think this will pass, regardless of what happens,” said Ross Gerber, CEO of Gerber Kawasaki Wealth & Investment Management, who was previously one of Tesla’s leading shareholders and is now a vocal critic of Musk and the company.
“I think this will pass, regardless of what happens”
Gerber called some of the package’s operational and financial targets “soft” and subject to significant discretion by the board, while also expressing doubts about the size of the package itself.
“Performance metrics included in (the proposed Musk compensation package) are, in many cases, blurred, lax, and subject to substantial discretion by the board.”
Musk also criticized two firms during Tesla’s latest investor call, calling them “professional terrorists.” He added that their influence on certain investment firms that own shares and vote is the reason he needs a larger stake in the company.
“Their influence on some investment firms that own shares and vote is part of the reason he needs a bigger stake in the company.”
“I do not intend to spend this money,” Musk said during the call, adding that voting must remain controlled: you need a strong influence, but not so much that you could be fired if you go off the rails.
“I do not intend to spend this money. It is necessary to have sufficient control over the voting to have a strong influence – but not so much that I could be fired if I go off the rails.”
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- Tesla offers Elon Musk a compensation package worth up to $148.7 billion, potentially reaching $1 trillion if company value hits $8.5 trillion, to retain his leadership and control.
- Tesla plans a massive compensation package for Elon Musk, potentially making him the first trillionaire by rewarding significant company growth and maintaining leadership during economic challenges.
