Elon Musk stands on the brink of becoming the planet’s first trillionaire, courtesy of a monumental compensation package endorsed by Tesla’s shareholders.
The CEO of Tesla, who already holds the title of the world’s wealthiest individual, secured approval on Thursday for a compensation plan that could net him stock valued at $1 trillion, contingent on meeting specific performance milestones over the next ten years.
This decision followed intense discussions concerning his leadership at the electric vehicle giant and whether such an extraordinary pay scale is justified. The debate stirred opinions ranging from individual investors to major pension funds and even drew remarks from the pope.
In the end, the proposal received overwhelming support, with over 75% of voting shareholders gathered at Tesla’s headquarters in Austin, Texas, giving it the green light.
“What a fantastic group of shareholders,” Musk commented after the votes were counted, encouraging them to “Hang on to your Tesla stock.”
Many investors were swayed by Musk’s implication that he might completely sever ties with Tesla if the compensation plan wasn’t approved.
There were fears that in doing so, Musk would tank the stock and send share prices plummeting.
As it turned out, Tesla shares, already up 80 percent in the past year, rose 1.5 percent on news of the vote, to $447.27 in after-hours trading.
For his part, Musk says the vote wasn’t really about the money but getting a higher Tesla stake – it will double to nearly 30 percent – so he could have more power over the company.
He said that was a pressing concern given Tesla’s future ‘robot army’ that he suggested he didn´t trust anyone else to control given the possible danger to humanity.
The vote is a resounding victory for Musk showing investors still have faith in him as Tesla struggles with plunging sales, market share and profits, partially driven by Musk’s allegience with President Donald Trump and foray into politics.
The vote came just three days after a report from Europe showing Tesla car sales plunged again last month, including a 50 percent collapse in Germany.
Still, many Tesla investors consider Musk as a sort of miracle man capable of stunning business feats, noting he pulled Tesla from the brink of bankruptcy a half-dozen years ago to turn it into one of the world’s most valuable companies.
The vote clears a path for Musk to become a trillionaire by granting him new shares, but it still won’t be easy.
The board of directors that designed the pay package require him to hit several ambitious financial and operational targets, including increasing the value of the company on the stock market nearly six times its current level.
Musk also has to deliver 20 million Tesla electric vehicles to the market over 10 years amid new, stiff competition, more than double the number since the founding of the company.
The vote is a resounding victory for Musk showing investors still have faith in him as Tesla struggles with plunging sales, market share and profits, partially driven by Musk’s allegience with President Donald Trump and foray into politics
He also has to deploy more than 1 million of his human-like robots that he has promised will transform work and home – he calls it a ‘robot army’ – from zero today.
Musk could add billions to his wealth in a few years by partly delivering these goals, according to various intermediate steps that will hand him newly created stock in the company as he nears the ultimate targets.
That could help him eventually top what is now considered America’s all-time richest man, John D. Rockefeller.
The railroad titan is estimated by Guinness World Records to have been worth $630 billion, in current dollars, at his peak wealth more than 110 years ago. Musk is worth $493 billion, as estimated by Forbes magazine.
Musk’s win came despite opposition from several large funds, including Calpers, the biggest U.S. public pension, and Norway’s sovereign wealth fund.
Two corporate watchdogs, Institutional Shareholder Services and Glass Lewis, also blasted the package, which so angered Musk he took to calling them ‘corporate terrorists’ at a recent investor meeting.
Critics argued that the board of directors was too beholden to Musk, his behavior too reckless lately and the riches offered too much.
Supporters said that Musk needed to be incentivized to focus on the company as he works to transform it into an AI powerhouse using software to operate hundreds of thousands of self-driving Tesla cars – many without steering wheels – and Tesla robots deployed in offices, factories and homes doing many tasks now handled by humans.
