In a historic decision, Tesla shareholders have approved an astonishing pay package for CEO Elon Musk, potentially valued at nearly $1 trillion (£760 billion). This unprecedented deal received the backing of 75% of the shareholders who participated in the vote during Tesla's annual general meeting held on Thursday in Austin, Texas.
The approved compensation plan mandates that Musk, who currently holds the title of the world's richest man, must significantly enhance the electric car manufacturer's market value over the coming years. Should he successfully meet a series of ambitious performance targets, Musk stands to gain hundreds of millions of new shares.
Despite the controversy surrounding the scale of this deal, the Tesla board argued that the company could not risk losing Musk's leadership. They maintained that the approval was essential for the company’s continued success, leading to a rousing applause from the audience at the meeting. Musk celebrated by taking the stage and dancing to chants of his name, stating, "What we're about to embark upon is not merely a new chapter of the future of Tesla, but a whole new book."
Musk's ambitious milestones include increasing Tesla's market value from $1.4 trillion to an astounding $8.5 trillion. Additionally, he must successfully deploy one million self-driving Robotaxi vehicles into commercial operation. However, Musk's comments during the meeting hinted at a shift in focus towards the Optimus robot, which raised concerns among analysts and Tesla enthusiasts who wish to see more emphasis on the electric vehicle sector.
Gene Munster, a prominent analyst and managing partner at Deepwater Asset Management, remarked on X, "Let it sink in where Musk's head is at. His vision of the 'new book' starts with Optimus." This comment underscored the uncertainty regarding Musk's priorities, as he initially did not mention the company's electric vehicles or full-self-driving (FSD) technology. Later, Musk did reference FSD, indicating that Tesla is nearing the point where it may allow drivers to text while driving. He also likened navigating regulatory challenges to being trapped in a Franz Kafka novel.
The U.S. regulators are currently investigating Tesla's self-driving features following several incidents where vehicles have driven through red lights or veered onto the wrong side of the road, leading to injuries. In after-hours trading, Tesla shares saw a slight uptick, continuing a remarkable rise of over 62% in the past six months.
Dan Ives, a tech analyst from Wedbush Securities and a long-time advocate for Musk’s leadership, reiterated that Musk is Tesla’s most valuable asset. He expressed confidence in the company's future, stating, "We continue to believe that the AI valuation is getting unlocked, and we believe the march to an AI-driven valuation for TSLA over the next 6-9 months has now begun." Musk already owns 13% of Tesla shares, further emphasizing his significant stake in the company's success.
This latest pay agreement follows a previous package worth tens of billions, which was ratified twice by shareholders contingent on Musk achieving a tenfold increase in Tesla's market value—an achievement he successfully met. However, a Delaware judge rejected this prior deal, citing concerns about the close relationships between Tesla board members and Musk. Currently, the Delaware Supreme Court is reviewing this decision, while Tesla has since reincorporated in Texas.
