- Tesla shareholders will vote on an Elon Musk compensation package Thursday.
- If Musk hits all incentive targets, his pay could reach $1 trillion in the next 10 years.
- Musk would have to increase current Tesla value by over 400% to hit the pay targets.
Tesla shareholders will vote Thursday on how much to pay CEO Elon Musk and industry watchers predict the outcome could make Musk — already the world’s richest individual — the first person to ever reach $1 trillion in personal wealth.
The pay package, should it gain approval, sets a variety of performance and stock value goals over the coming decade and Musk would have to meet most of them to reach the $1 trillion mark.
In September, Tesla’s board of directors encouraged shareholders to back the plan and noted that keeping Musk as the chief executive of the electric car maker could be hanging in the balance after he “raised the possibility that he may pursue other interests” if the compensation package is not approved.
Musk’s previous pay plans have found overwhelming support from shareholders and most industry watchers predict they will support the current proposal.
“Shareholders are going to support this overwhelmingly, because Musk is the key asset for Tesla,” Dan Ives, analyst for Wedbush Securities and one of the biggest Tesla bulls on Wall Street, told CNN. “Tesla needs Musk to take it into the autonomous driving, robotic future.”
Tesla no longer #1 EV maker
Tesla has been having a rough go of late, losing its status as the top electric vehicle maker in the world to Chinese EV company BYD amid slumping sales. The slowdown has been attributed to a number of issues including failure to keep its model lineup fresh along with underperforming interest in its pricey Cybertruck, which became available for purchase last year.
Musk’s political activities, including raising hundreds of millions of dollars for President Donald Trump’s 2024 campaign and later joining the president’s inner circle as the temporary head of the Department of Government Efficiency, have also played a role in tarnishing Tesla’s reputation among some consumers.
But while a supporting vote is expected, some major Tesla shareholders are opposing the new, massive pay package.
Norway’s $2 trillion sovereign wealth fund, managed by Norges Bank Investment Management, said it will vote against Musk’s trillion-dollar pay package at Tesla’s annual shareholder meeting.
“While we appreciate the significant value created under Mr. Musk’s visionary role, we are concerned about the total size of the award, dilution, and lack of mitigation of key person risk — consistent with our views on executive compensation,” NBIM said in a statement, per CNBC. “We will continue to seek constructive dialogue with Tesla on this and other topics.”
Musk’s road to $1 trillion
While Tesla faces the challenges of an increasingly competitive electric vehicle market, industry experts say the company’s future viability will depend heavily on finding success with its development of self-driving technology, so-called “robotaxis” and humanoid robots.
The compensation plan up for a vote on Thursday would come in the form of a stock grant that could give Musk over 400 million additional shares of Tesla stock over the next 10 years, according to a breakdown by CNN. Those shares would be worth about $1 trillion, assuming the company reaches the $8.5 trillion market cap needed to have Musk qualify for the full potential payout.
That goal represents an increase of over 400% from Tesla’s current market cap, which was at $1.39 trillion as of midday on Thursday.
But Musk, as well as some Wall Street analysts and investors, think that the company is on course to reach that $8.5 trillion target and beyond, by shifting focus from merely selling electric vehicles to selling self-driving cars, humanoid robots as well as rides in a fleet of robotaxis, per CNN’s report.