Tesla Shareholders Will Vote Shortly on Musk's $1 Trillion Pay Deal. What You Need to Know
Shareholders of $Tesla (TSLA.US)$will decide Thursday whether to grant CEO Elon Musk an unprecedented 10-year compensation package worth up to $1 trillion or risk seeing the controversial business leader lose interest in – or even leave – the EV giant.
Tesla stockholders will vote at the company's annual meeting after Thursday's U.S. market close on whether to approve the pact or vote it down.
The measure, which Tesla's board has unanimously backed, requires approval from investors holding a majority of TSLA's shares.
Here are some details:
Musk's Proposed Compensation
Tesla management wants to pay Musk 12 tranches of about 35.3 million TSLA shares each over 10 years, for a total of about 423.7 million shares of stock.
That would be worth about $195.1 billion at Tesla's current price, but Musk must push the shares' value up significantly and meet other criteria to get the full award.
He has to meet 12 "market capitalization milestones" and another 12 "operational milestones" to get the full package, including boosting Tesla's market cap to $8.5 trillion over 10 years from about $1.5 trillion today.
Successfully doing that could make Tesla the most valuable company in world history. By comparison, Nvidia – currently America's highest-value public company – is worth some $4.75 trillion today.
Musk would also see his Tesla stake rise to about 25% from a current roughly 13%.
When the Vote Takes Place
Online shareholder voting wrapped up Wednesday night, with some in-person voting set to occur at Thurday's in-person stockholder meeting at Tesla's Austin, Texas, headquarters.
The meeting will begin at about 4 p.m. ET after the U.S. market closes, although it's unclear when Tesla will announce voting results. Investors get one vote for each Tesla share held.
Arguments for Approval
Tesla's board has said that it must give Musk – who also runs or owns Twitter/X, xAI, SpaceX and other firms – a generous compensation deal to keep him interested in the electric-vehicle company, if not to prevent him from leaving.
"We are confident that this award will incentivize Elon to remain at Tesla and focus his unmatched leadership abilities on further creating shareholder value for Tesla shareholders and attracting and retaining talent at Tesla," a board special compensation committee wrote in a recent letter to shareholders. "To be clear, losing Elon would not only mean the loss of his talents but also the loss of a leader who is a magnet for hiring and retaining talent at Tesla."
"Through Elon's unique vision and leadership, Tesla is transitioning from its role as a leader in the electric vehicle and renewable energy industries to grow towards becoming a leader in AI, robotics and related services," the committee wrote. "To succeed, it requires a leader who combines strategic foresight, adaptability and relentless execution to outperform competition and inspire the team."
The committee also noted that an ongoing shareholder lawsuit has held up a large stock grant that Musk was supposed to receive under a 2018 compensation package, allegedly meaning the CEO hasn't received "meaningful compensation" since 2018.
Arguments Against Approval
While many market watchers expect shareholders to approve the pay package, advisory firms Institutional Shareholder Services and Glass Lewis – which guide institutional investors on how to vote on proxy proposals – have urged its rejection.
ISS wrote in a report last week that while the deal could create "enormous value for shareholders," the firm still had "unmitigated concerns surrounding the special award's magnitude and design."
Glass Lewis also claimed that Tesla's board will have discretion to approve some traches of stock even if Musk doesn't hit all of his milestones.
Meanwhile, Norway's $1.9 trillion sovereign-wealth fund, whose 1.2% stake in Tesla makes it one of the company's larger shareholders, said it plans to vote against the deal.
"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," the fund said in a statement.
Cathie Wood and Mike Dell Back Musk, But the Pope Is Worried
Many business, political and even spiritual leaders have weighed in on Musk's proposed pay package, which would be the largest ever for a public company CEO.
It would also potentially make Musk – who Forbes says is already the world's richest person, with an estimated $500.6 billion of wealth as of Wednesday – the world's first trillionaire.
CEO Cathie Wood of major tech-investment firm Ark Invest argued in favor of the package on Twitter/X.
"Elon Musk is the most productive human being on earth. And a human being who attracts incredible talent – people who want to solve the world's hardest problems," she wrote. "This is a win-win for all of us."
CEO Michael Dell of $Dell Technologies (DELL.US)$ likewise endorsed the payout, writing on Twitter/X that "the award is only achieved IF [Musk] hits exceptionally ambitious market-cap and operational milestones – if he falls short, he gets nothing."
But detractors include Democratic Socialist Vermont Sen. Bernie Sanders, who recently slammed the package on social media as "not only grossly immoral, [but] insane economics."
And even Pope Leo XIV waded into the debate.
He recently told Catholic publication Crux that "CEOs 60 years ago might have been making four to six times more than what the workers are receiving, [but now there's] the news that Elon Musk is going to be the first trillionaire in the world. What does that mean and what's that about? If that is the only thing that has value anymore, then we're in big trouble."
Disclaimer: Community is offered by Moomoo Technologies Inc. and is for educational purposes only.
Read more
Comment
Sign in to post a comment
Jerry Kronenberg
Director of Financial Content
Former top editor at Seeking Alpha, Fidelity.com, TheStreet.com and UPI.
4727
Followers
3000
Following
10K
Visitors
Follow
Market Insights
Hot Topics Hot Topics
Trump's 'Taco deal' sparks market rebound : Market rebound sustainable ?
1. If tariffs pause, which sectors benefit first? 2. Trump's "threat-compromise" cycle normalizes—how to hedge across assets?
Moo Options Explorer
Apr 7 17:28
Weekly roundup: Tariff turmoil and recession fears dominate
Moo Options Explorer
Mar 31 17:01
Weekly roundup: Tariff concerns and Tesla’s rollercoaster ride
K_Tigerlily : I am cackling. This is the only vote I’ve seen 100% on and it’s to vote no (which I love).
sam li : Opposition??? Mediocre thinking
WilliamBe : Those who look forward to a bright future will certainly cast their votes in favor.
71542371 : There is no Tesla without Elon Musk.
71542371 K_Tigerlily : whats it like to be that wrong?
Dileep Radhakrishnan : Tesla furure is tied to Musk. if he decides to leave, i am not sure what will have to everything that Tesla promised. Musk should be given the package and incentivised to stay and make Tesla the most valuable company in the world.
Godzillacadabra : I do like Elon, better our first trillionaire be on the right side of history. So yeah I am ok for a yes
K_Tigerlily 71542371 : Wrong that the moomoo vote was 100%? I wasn’t. I could hope it wouldn’t pass, because he’s a scumbag, but figured it would because it’s all his friends and tech-bros voting.
Artaylalex05 : yes
K_Tigerlily Godzillacadabra : How is he on the right side of history? And the fact you think a trillionaire should exist is highly problematic.
View more comments...