Tesla investors will decide on Elon Musk’s unprecedented $1 trillion compensation tied to performance goals, amid board support and shareholder opposition
NEW YORK: Tesla shareholders will vote on Thursday on an unprecedented $1 trillion compensation package designed to retain Elon Musk long enough to achieve his promised technological breakthroughs.
The performance-based package could increase Musk’s Tesla ownership from over 12% to more than 25% if he meets all benchmarks.
Tesla Chair Robin Denholm has publicly championed the plan, warning shareholders that “without Elon, Tesla could lose significant value” in pursuing its transformative vision.
Musk has suggested he might reduce his Tesla involvement unless his ownership stake increases sufficiently to maintain influence over the company’s future direction.
“It’s not like I’m going to spend the money,” Musk said during an October conference call, explaining his desire for control over potential future technologies like “this robot army.”
The vote outcome will be announced at Tesla’s annual shareholder meeting at the company’s Austin, Texas factory on Thursday.
Anti-Musk protesters plan demonstrations outside the Tesla gigafactory following a downtown Austin rally on Wednesday.
Activist Ethan McBride called the package excessive, stating “a trillion dollars is way too much any person should have under any circumstances.”
Musk must achieve 12 market capitalization milestones and operational targets including delivering 20 million vehicles to receive the full compensation.
The package requires Musk to remain at Tesla for at least seven-and-a-half years while hitting performance goals.
Tesla would need to reach $2 trillion in market value for Musk to receive the first compensation tranche.
Musk has predicted Tesla will become “the most valuable company in the world by far” if it delivers on autonomous driving and artificial intelligence promises.
Institutional advisory firms Glass Lewis and Institutional Shareholder Services have recommended against the pay package.
ISS criticized the “unprecedented” value separation into tranches and noted Musk’s existing financial ties to Tesla’s performance.
Norway’s sovereign wealth fund, among Tesla’s top 10 shareholders, announced it will vote against the proposal.
New York State Comptroller Thomas DiNapoli also opposes the package while Florida officials have endorsed it as the “gold standard for executive compensation.” – AFP
