- Tesla has proposed a new compensation package for Elon Musk that could reach approximately $1 trillion if certain milestones are achieved.
- The plan includes a grant of up to 423.7 million shares over 10 years based on market cap, financial, and technological goals, with no base salary for Musk.
- Major investors such as Atreides Management have publicly supported the package, but large pension funds and proxy advisory firms have recommended voting against it.
- Tesla shareholders will vote on the pay package, with results to be revealed at the company’s annual meeting on November 6.
- Retail investor sentiment remains cautious, and stock performance is up 9% this year and 76% over the past 12 months.
Tesla has introduced a significant new compensation plan for CEO Elon Musk, proposing a potential payout of nearly $1 trillion. The company will require shareholder approval for the package at its annual meeting scheduled for November 6.
According to the proposal, Musk would receive no regular salary. Instead, he could be awarded up to 423.7 million shares over a decade, contingent on Tesla reaching key targets related to earnings, vehicle production, advanced technologies like robotaxis and humanoid robots, and an increase in the total market capitalization to $8.5 trillion.
Gavin Baker of Atreides Management announced his support for the package, stating, “I believe shareholders should generally support thoughtfully structured performance-based CEO compensation packages because they incentivize CEOs to create transformational growth and value.” Baker characterized the new deal as “arguably better” than Musk’s previous 2018 package, which was valued at over $50 billion and was recently voided by a Delaware court for being excessive.
Supporters of the compensation plan, including Baker, argue that Musk’s continued involvement is essential for Tesla’s direction and long-term performance. The company’s board chair, Robyn Denholm, previously warned that Musk might consider leaving if the compensation plan is not ratified. Baker commented, “I believe it is highly likely that Tesla’s stock would decline significantly should Elon leave and even more should the Optimus team leave with him.”
However, the proposed package faces significant opposition. Large U.S. pension funds such as California Public Employees’ Retirement System (CalPERS), the New York State Retirement Fund, and the American Federation of Teachers have decided to vote against it. Proxy advisory companies Glass Lewis and Institutional Shareholder Services have also recommended a ‘no’ vote, which has drawn criticism from Musk.
Retail investor sentiment has stayed bearish as reflected in message volume data, despite Tesla shares rising 9% so far this year and about 76% over the last twelve months. Shareholders will decide the outcome in the upcoming annual meeting.
For more details, refer to Gavin Baker’s statement.
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