Elon Musk’s $1tn pay deal approved by Tesla shareholders

Tesla boss Elon Musk has received a record pay package that could be worth nearly $1tn (£760bn) approved by shareholders.

The unprecedented deal was approved by a 75% majority of votes and received huge applause from the audience at the company’s annual general meeting on Thursday.

Musk, who is already the richest man in the world, should raise the electric car company’s market value significantly over 10 years. If he does this and achieves various goals, he will be rewarded with hundreds of millions of new shares.

The size of the potential payout has drawn criticism, but Tesla’s board has argued that Musk could leave the company if it is not approved — and that it cannot afford to lose him.

After this announcement, Musk took the stage in Austin, Texas, and danced to chants of his name.

“What we are about to embark on is not just a new chapter in Tesla’s future, but a whole new book,” he said.

He added: “Other shareholder meetings are a nap, but ours is annoying. Look at this. This is sick.”

Key milestones Musk must achieve over the next decade include:

• 20 million Tesla cars and 1 million robots delivered
• Obtaining 10 million subscriptions to the full self-driving feature from Tesla
• One million autonomous Robotaxi vehicles put into commercial operation
• Earn up to $400 billion in underlying profits
• It eventually raised Tesla’s total market value to $8.5 trillion, currently $1.4 trillion

He will not receive a salary under the agreed upon deal.

But achieving all of the above milestones would net him a stock grant of more than 400 million additional shares of Tesla stock — worth about $1 trillion if the company’s market cap is raised high enough.

Musk’s early comments Thursday put the Optimus robot in the spotlight, dashing the hopes of some longtime analysts and Tesla watchers who want him to focus on reviving the company’s electric vehicle business.

Optimus, which the company unveiled as a prototype in 2022, is designed to be an “autonomous humanoid robot” that performs “unsafe, repetitive or tedious tasks.”

Using the same artificial intelligence (AI) systems used in Tesla cars, Musk has championed it as a key component of his company’s future.

He has previously said that his ability to walk, run and lift things will be as well Allowing it to play a major role in his factories – And in the future in homes.

“Let it sink in where Musk is thinking,” analyst Gene Munster, managing partner at Deepwater Asset Management, wrote on X.

“His vision for the new book starts with Optimus. Cars, FSD and taxis haven’t been mentioned yet.”

Later, Musk referenced FSD, short for Full Self-Driving, saying the company is “almost comfortable” with letting drivers “basically text and drive.”

American regulators are Investigating Tesla’s self-driving feature After several accidents, in which cars ran through red lights or on the wrong side of the road, some of them resulted in accidents and injuries.

Tesla shares rose slightly in after-hours trading but are up more than 62% over the past six months.

Sales have declined over the year since Musk allied himself with US President Donald Trump, a relationship that collapsed last spring.

Tesla shareholder Ross Gerber told BBC News that Musk’s pay deal represented “another notch in the unbelievable things you see in business.”

Gerber, who is CEO of investment firm Gerber Kawasaki, said Musk has made clear his goals for Tesla, but the company faces a large number of challenges, including its faltering financial performance.

Gerber said it’s still unclear whether there will be much demand for humanoid robots. He added that Tesla also faces stiff competition in the robotaxi industry from competitors like Waymo.

Gerber said his company recently reduced its stake in Tesla due to concerns about “polarization.” [Musk’s] Personality” that “demolished the value of the brand.”

“Elon seems disconnected from the fact that his opinion among the public is very low,” he said.

Dan Ives of Wedbush Securities, a technology analyst who has been a longtime supporter of Musk’s leadership of Tesla, called him Tesla’s “biggest asset” in a note published after the vote.

“We continue to believe that the AI ​​valuation has been unlocked, and we believe the march toward an AI-driven valuation for TSLA over the next six to nine months has now begun,” Mr. Ives added.

Anne Lipton, a law professor at the University of Colorado, said it was unclear whether Musk would achieve the goals set by the company, but she highlighted how he “achieved those milestones ahead of schedule” in 2018.

She said his political interests created some “polarization,” but his salaries “placed no restrictions on his activities” outside the company.

Musk already owns 13% of Tesla shares. Shareholders twice approved a pay package worth tens of billions of dollars if he increased the company’s market value tenfold – which he did.

But a Delaware judge rejected that pay deal on the grounds that Tesla board members were too close to Musk.

Tesla has reincorporated from Delaware to Texas, and the Delaware Supreme Court is currently reviewing the lower court judge’s decision.

The new pay package has been 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 largest public pension fund in the United States.

That has left Musk more reliant on the unusually high volume of retail investors in Tesla.

Musk and his brother Kimbal, who also serves on Tesla’s board of directors, were allowed to vote at Thursday’s meeting.

In recent weeks, Tesla board members helped push for Musk’s new pay package with a marketing campaign that has drawn the ire of some corporate governance experts.

A video posted on votetesla.com showed Chairman Robyn Denholm and director Kathleen Wilson Thompson praising Musk.

Kathryn Hannon, investment director at RBC Brewin Dolphin, said the new pay deal would give Musk “increased voting power over the company,” something he has long been demanding for several years.

“Whether you like Elon Musk or not, he is a visionary in this space and I think putting the right management and motivation structures around him to make that happen will hopefully align him with stakeholders on this journey of success.”