Tesla says Musk should be paid $1tn

Ahead of Tesla’s annual general meeting (AGM) on Thursday, there was one key message the electric car maker had for shareholders: Its boss is worth a trillion dollars.

It has released digital ads in support of Elon Musk’s proposed bumper pay package, while Votetesla.com shows a video of Chairman Robin Denholm and director Kathleen Wilson Thompson praising it, as triumphant music crescendos in the background.

Not everyone is clearly singing from the same anthem, which means the annual General Assembly in Austin, Texas, is set to become a referendum on Musk himself, after a right-wing political shift that has made him one of the most polarizing CEOs in recent memory.

Musk himself has turned to Company

He also used his megaphone on social media to amplify some of the deal’s high-profile backers, including Dell Technologies’ Michael Dell, Ark Invest CEO Cathie Wood, and his brother Kimbal, who sits on Tesla’s board.

“No one is ever close to my brother,” Kimball said, praising his brother’s leadership qualities.

Musk replied: “Thank you, brother ❤️.”

Not everyone agrees.

For some, the focus on Musk and the soap opera around his salary is an indication of how the auto company… Which saw sales decline He lost his way under his leadership.

“What’s astounding to me is that a company that’s struggling to sell cars would spend money on advertising to sell a pay package,” said Ross Gerber, CEO of Gerber Kawasaki Wealth and Investment Management.

Mr. Gerber has been reducing his Tesla holdings in recent years — and has been critical of the direction it is headed.

“[Tesla] “It needs to change the company’s focus back to its core – to sell electric cars again.”

The deal Tesla wants shareholders to support is not one salary followed by twelve zeros.

Instead, it sets out Musk’s goal of taking Tesla’s market cap to $8.5 trillion, from $1.4 trillion at the time of writing.

He will also have to oversee a huge boom in the company’s self-driving ‘Robotaxi’ cars, bringing a million of them into commercial operation – no small deal given their sheer size. Disappointing launch.

If you do this, among other criteria, Musk will receive 423.7 million new shares, which would be worth about $1 trillion if the target valuation is reached.

Tesla did not respond to BBC requests to comment on its strategy to mobilize support from shareholders.

Of course, this isn’t the first pay controversy that Musk and Tesla have been embroiled in.

Previously, Tesla twice asked shareholders to endorse a pay package for Mr. Musk worth tens of billions of dollars if he achieved a ten-fold increase in Tesla’s market value.

He achieved this feat but in 2024 he became a judge in Delaware Reject the deal On the basis that Tesla’s board members were personally and financially involved with the company’s president.

The Delaware Supreme Court is reviewing that decision — even as deliberations over this larger pay package continue.

“The strategy is the same from Tesla, which does not mean this is normal. There is nothing normal about Tesla,” Dorothy Lund, a professor at Columbia Law School, told BBC News.

“They are not a model of good corporate governance.”

Professor Lund said voter campaigns like this sometimes happened when a company was concerned, for example. About an activist shareholder who forces major changes to how it operates, such as who is on its board of directors.

“[But] “I have never seen anything like this happen in the context of a compensation decision,” Professor Lund said.

Unlike the vote on the previous compensation package, both Elon and Kimbal Musk will be able to vote as they seek to reach the majority threshold required to conclude the deal.

Mr. Musk is already the richest man in the world, become The first known half-trillionaire was born earlier this year.

Tesla’s argument in support of the pay package is based on the idea that Musk may leave the company if shareholders do not follow the board’s recommendation and approve the pay package.

She says she cannot afford to lose him, and that he “uniquely possesses the leadership qualities necessary…to achieve her long-term mission.”

In the video posted on votetesla.com, Ms. Wilson-Thompson said the board conducted a seven-month process using legal and compensation experts to put together the compensation deal.

On an earnings call last month, Musk downplayed the focus on propulsion, saying the real issue was ensuring he had enough control in order to properly steer Tesla.

But — apart from the question of whether Musk, with his preoccupation with self-driving cars and humanoid robots, is setting the right course — there is also the question of whether championing the president is the board’s job.

“The role of the board is to have a fiduciary responsibility to shareholders, not to defend the CEO,” said Matthew Cutchin of Yale University School of the Environment, an economics professor who participated in the study. He co-authored a recent study Trying to measure the damage Mr. Musk has done to Tesla recently.

It is clear that a number of key decision makers are not convinced that the deal represents value for money.

Proxy advisers Glass Lewis and Institutional Shareholder Services (ISS), which advise asset managers on how to vote on major corporate proposals, have recommended investors reject the pay package, saying it is excessive and will dilute shareholder value.

Norway’s sovereign wealth fund, the world’s largest national wealth fund, followed suit, as did the largest public pension fund in the United States, CalPERS.

New York State Comptroller Thomas DiNapoli He urged investors To also decline to re-elect board members, saying they failed to “provide independent oversight and accountability.”

With some institutions balking, that could make Mr. Musk more reliant on Tesla’s unusually high volume of retail investors — who tend to back him — to get his wish.

All that means, in Words from a Morgan Stanley analyst Adam Jonas Thursday’s vote is set to be one of the “most important events” in Tesla’s history – with a “distinct possibility” the pay package will not pass.

It doesn’t help Musk’s case that protesters continue to hold anti-Tesla rallies, months after his controversial shift as efficiency czar of US President Donald Trump’s government. Crashed and burned in May.

“It’s hard for me to imagine that Elon Musk, in the very near term, will undo the damage he’s done to this brand,” Mr. Cotchin said.

However, others might say that Musk’s exceptional entrepreneurial record would make it unwise to bet against him, even when the amount bet is astonishingly high at $1 trillion.

“It’s hard to deny that Elon Musk’s larger-than-life personality has helped drive more interest and awareness for his organization than any other corporate leader in the modern era,” said Jessica Caldwell, head of insights at Edmunds.

She added: “He has become a more polarizing figure over time, but there is still belief in his ability to present bold and unconventional ideas.”

The trillion-dollar question now is: Will Tesla shareholders agree?