Tesla board warns shareholders to approve Musk's $1 trillion pay deal or risk losing him

Is Musk really worth a trillion dollars?

by · TechSpot

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A hot potato: How much would a company be willing to pay to keep its CEO? In the case of Tesla, board chairman Robyn Denholm believes shareholders should approve Elon Musk's $1 trillion pay package or risk losing the world's richest boss. And that would be very bad for Tesla, apparently.

Musk's proposed pay package, which consists of 12 tranches of shares, will award him up to $1 trillion contingent on meeting certain targets, including increasing the company's market cap from its current $1.36 trillion to $8.5 trillion by 2035 – that's around twice what the world's richest company, Nvidia, is worth today. Other goals include the delivery of 20 million Tesla vehicles, deploying 1 million robotaxis, and shipping 1 million Optimus robots.

Ahead of Tesla's annual meeting next week, Denholm has asked shareholders to vote in favor of the package. She warned that the automaker would risk becoming "just another car company" without Musk, and that he is key to its push into Full Self Driving and Optimus technologies.

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"Without Elon, Tesla could lose significant value, as our company may no longer be valued for what we aim to become," Denholm wrote.

"The fundamental question for shareholders at this year's Annual Meeting is simple: Do you want to retain Elon as Tesla's CEO and motivate him to drive Tesla to become the leading provider of autonomous solutions and the most valuable company in the world?"

Giving the richest person in the world another trillion dollars doesn't seem like a particularly good thing, but Musk said it was more about securing influence and controlling the direction of Tesla. If it is approved, his stake in the company will increase from its current 13% to around 29%.

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"It's called compensation, but it's not like I'm going to go spend the money," Musk added. "It's just, if we build this robot army, do I have at least a strong influence over that robot army, not current control, but a strong influence? That's what it comes down to in a nutshell. I don't feel comfortable wielding that robot army if I don't have at least a strong influence."

Musk added that if he does increase his percentage of shares in Tesla to the mid-20s, it will give him "a strong influence" but other shareholders will still be able to have him fired, should he go "insane."

After years of expansion, Tesla's market share is declining across all regions.

Musk has also claimed he needs to protect Tesla from ISS and Glass Lewis, two research firms that advise shareholders on voting issues. Both companies have advised against voting for Musk's new pay package, prompting him to call them "corporate terrorists."

It's not the first time that Musk has threatened Tesla in this way. In January 2024, he warned that unless his ownership in EV maker increased to 25%, he would be uncomfortable growing the firm to be a leader in AI and robotics. He added that without owning a quarter of Tesla, he would prefer to build products outside of the automaker.