TESLA boss, Elon Musk, has had a record-breaking pay package that could be worth nearly $1trillion (£760bn) approved by shareholders by 75 per cent of votes and drew huge applause from the audience at the firm’s annual general meeting on Thursday, November 6.
Musk, who is already the world’s richest man, must drastically raise the electric car firm’s market value over 10 years. If he does this and meets various targets, he will be rewarded with hundreds of millions of new shares.
The scale of the potential payout has drawn criticism, but the Tesla Board argued that Musk might leave the company if it was not approved, and that it could not afford to lose him.
Following the announcement, Musk took to the stage in Austin, Texas, United States (US), dancing to chants of his name.
“What we’re about to embark upon is not merely a new chapter of the future of Tesla, but a whole new book. Other shareholder meetings are snoozefests, but ours are bangers. Look at this. This is sick,” he said.
Under the new pay deal, Musk must, over the next decade, ensure the delivery of 20 million Tesla vehicles and one million robots; get 10 million subscriptions to Tesla’s Full Self-Driving feature; bring one million self-driving Robotaxi vehicles into commercial operation; earn up to $400bn in core profit; and eventually lift Tesla’s overall market value to $8.5trillion, from the current $1.4trillion.
He won’t receive a salary under the agreed deal.
But meeting all the above milestones would see him awarded a stock grant of over 400 million additional Tesla shares, worth around $1trillion, if the firm’s market value is raised high enough.
Musk’s early remarks on Thursday placed the spotlight on the Optimus robot, dashing the hopes of some long-time analysts and Tesla watchers who want him to focus on reviving the company’s electric vehicle business.
According to the BBC, Optimus, unveiled as a prototype by the company in 2022, is designed to be an “autonomous humanoid robot” performing “unsafe, repetitive or boring tasks.”
Using the same artificial intelligence (AI) systems as those powering Tesla vehicles, it has been championed by Musk as central to his firm’s future.
He had previously said its ability to walk, run and lift items would allow it to play a key role in his factories, and in future, in homes.
Musk already held 13 per cent of Tesla shares and shareholders had twice ratified a pay package worth tens of billions of dollars if he achieved a tenfold increase in the company’s market value, which he did.
But a Delaware Judge rejected that pay deal on grounds that Tesla Board members were too close to Musk.
Tesla reincorporated from Delaware to Texas, and the Delaware Supreme Court is currently reviewing the lower court Judge’s decision.
The new pay package was rejected by several major institutional investors, including Norway’s Sovereign Wealth Fund, the world’s largest national wealth fund, and the California Public Employees’ Retirement System (CalPERS), the biggest public pension fund in the US.
That left Musk more reliant on Tesla’s unusually large volume of retail investors.
Musk and his brother, Kimbal, who also serves on the Tesla Board, were both allowed to vote going into Thursday’s meeting.
In recent weeks, members of the Board of Directors have helped lobby for Musk’s new pay package with a marketing blitz that riled some corporate governance experts.
A video posted to votetesla.com showed Board Chair, Robyn Denholm, and Director, Kathleen Wilson-Thompson, praising Musk.
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