Tesla shareholders approve historic $1T pay package for Elon Musk
What's the story
Tesla shareholders have approved a massive compensation package for CEO Elon Musk, one that could be worth as much as $1 trillion in company shares. The proposal received more than 75% support from participating shareholders, in line with the backing Musk has received for previous pay packages. Upon hearing the result, shareholders present at Tesla's Austin factory, began chanting "Elon! Elon!" in celebration of the decision.
Future prospects
Musk says it's a new chapter for Tesla
Musk, flanked by dancing Optimus robots at the announcement, said "what we're about to embark upon is not merely a new chapter of the future of Tesla, but a whole new book." The deal doesn't mean Musk will get $1 trillion immediately or even get a salary. Instead, it sets him up to earn hundreds of billions and gain more control over Tesla if he meets certain milestones and boosts profits along the way.
Compensation details
Pay package divided into tranches
The pay package is divided into 12 tranches tied to operational, adjusted profit, and market cap targets. Each tranche gives more shares to Musk if those goals are met. For example, Tesla will have to grow its current $1.5 trillion market cap to $8.5 trillion in a decade for Musk to qualify for the full potential payout of this package.
Campaign efforts
Tesla aggressively campaigned for shareholder support
The vote came after two months of aggressive campaigning by Tesla, its board, and several executives. The company made public appeals for shareholders to approve the package and even aired TV ads about the vote—something it doesn't even do for its cars. Chairwoman Robyn Denholm said at Thursday's meeting, "Tesla is at an inflection point—and this last year has been a critical one in our history."
Control concerns
Musk needs more voting control to stay at Tesla
Musk urged shareholders to approve the package as it was the easiest way to give him more voting control over the company. He currently owns around 15% and has indicated he might leave Tesla if he doesn't get around 25% control. This would protect him from being ousted and losing control of the "robot army" Tesla is building, Musk has said.