Elon Musk could soon claim the title of the highest-paid CEO in history after Tesla shareholders approved a record-shattering pay package — a resounding show of confidence that comes with equally astronomical expectations.
To become the trillion-dollar man, or more precisely, unlock a potential $1 trillion stock-based pay package, Musk has to achieve 12 market capitalization and 12 operational milestones. These include a goal of 10M active full-self driving subscriptions, 20M Tesla vehicles delivered, putting one million robotaxis into service, and deploy one million humanoid robots within the next decade. Additionally, Tesla (TSLA) must achieve $400B in core profits and reach a market cap of $8.5 trillion.
And more crucially, Musk must remain at Tesla (TSLA) for at least seven and a half years to fully vest in the shares.
With 75% of votes in favor, the board and stakeholders both “recognize the formidable nature of this undertaking and as a result, the importance of having a leader who is not only willing and capable but eager to meet this challenge.”
The outcome of the vote was not surprising as board’s full-throated endorsement of its CEO overshadowed opposition from voter proxy groups, certain large investors, and funds including Norway’s $2 trillion sovereign wealth fund and the California Public Employees’ Retirement System ((CalPERS)), all of which opposed the enormous size of the package, dilutive impact to shareholders, and exclusion of long-term profit goals, while others were in opposition given Musk’s politics and commitments to SpaceX, Neuralink, the Boring Company, and xAI.
For the board, the package is ultimately designed to keep Musk focused on Tesla.
“We believe that Elon’s singular vision is vital to navigating this critical inflection point,” and “retaining and incentivizing Elon is fundamental to Tesla achieving these goals and becoming the most valuable company in history,” the board said in a filing with the U.S. Securities and Exchange Commission.
Another topic on Wall Street’s radar was a shareholder proposal allowing Tesla (TSLA) to invest in xAI, accelerating the company’s AI capabilities “secure access to advanced AI capabilities, enhance product innovation, and drive shareholder value. While the measure received more votes in favor than against, a notable number of shareholders abstained. As the vote was advisory rather than binding, it now falls to Tesla’s board to determine the next steps.