Tesla Shareholders Set to Approve $1 Trillion Pay Package for Musk

UPDATE: Tesla shareholders are on the brink of an unprecedented decision that could reshape the future of the electric vehicle giant. In a vote scheduled for Thursday, July 13, 2023, in Austin, Texas, investors are expected to approve a pay package for CEO Elon Musk valued at up to $1 trillion. This monumental deal aims to secure Musk’s leadership amid ambitious plans for robotaxis and advanced AI technologies.

The vote comes as Musk prepares to solidify his control over Tesla, increasing his ownership stake from around 15% to 25%. The proposed package hinges on achieving exceptional milestones over the next decade, including growing Tesla’s market cap from approximately $1.5 trillion to an astonishing $8.5 trillion, selling 20 million cars, and launching one million robotaxis. This ambitious plan underscores Musk’s vision of a future dominated by autonomous vehicles and humanoid robots.

Why This Matters NOW: As Tesla continues to grapple with production challenges and delays in its ambitious AI initiatives, this vote represents a critical juncture. Failure to pass the pay package could jeopardize Musk’s focus and leadership, leaving shareholders anxious about the company’s direction. Robyn Denholm, Tesla’s board chair, labeled the upcoming vote an “inflection point,” cautioning that rejecting the plan might force Musk to reconsider his commitment to Tesla.

Institutional investors have voiced their concerns. CalPERS, among others, has criticized the proposal as excessively large and potentially dilutive to existing shareholders. They argue that the pay package could transfer an “unprecedented amount of wealth” to Musk without sufficient evidence of performance restraint. However, support for the package remains strong among many board members who believe Musk’s singular vision is crucial for Tesla’s success.

The backdrop to this vote includes Musk’s controversial history with compensation packages. A previous nearly $56 billion deal was deemed “deeply flawed” by a Delaware judge in January 2024, raising questions about governance at Tesla. Musk’s new pay package could set a historic precedent for CEO compensation, fundamentally altering the relationship between performance and corporate governance.

As the clock ticks down to the vote, stakeholders are left to ponder the implications of Musk’s control over Tesla. With his attention divided among various ventures, including his AI startup xAI, shareholders are wary of Musk’s focus. His commitments to deliver on groundbreaking projects have often been met with skepticism due to a history of unmet timelines.

What’s Next: If the pay package passes, expect an immediate push towards fulfilling Musk’s ambitious goals. However, dissenting voices will likely continue to challenge the governance structure at Tesla. With only investors holding at least 3% of the company’s stock able to initiate lawsuits, shareholder power appears limited, raising questions about accountability within the corporation.

The outcome of this vote is pivotal—not only for Tesla’s future but also for the broader implications it holds for corporate governance and executive compensation across the tech industry. As we await the results from Austin, the world watches closely, questioning whether Musk will indeed remain the driving force behind Tesla’s evolution or if this unprecedented decision will lead to unforeseen consequences.

Stay tuned for the latest updates as this story develops.