Remember the $50 billion pay package for Tesla CEO Elon Musk which was struck down by the courts, leaving the world’s richest man furious as he awaits his appeal, and contributing to charges he was more focused on his other businesses than running Tesla?
Well, the Tesla board is back with another compensation agreement proposal for shareholders. And this time, the offer to Musk is a package worth up to $1 trillion if he builds on Tesla’s bottom line. How much more would Tesla have to be valued at to make Musk a trillionaire? Roughly $8.5 trillion give or take, up from $1 trillion today, and more than double the present valuation of Nvidia Corp., which is currently the most valuable company in the world. Needless to say, it’s an unprecedented package.
The proposal sets out performance targets that Tesla must meet over a 10-year period to reap the full value of the compensation package that is comprised largely of shares—about 424 million new ones in all. Among the growth opportunities is the rollout of the Robotaxi business, which has taken fledgling steps and is opening up ride-shares to the general public in Austin, Texas, and San Francisco.
Regaining Voting Control of Tesla
Under the plan, Musk would increase his stake in Tesla to 25 percent or more, something the CEO has said he needs to pursue his agenda. He has threatened to take his AI and robotics ventures elsewhere without voting control and a new compensation package.
The proposal also meets another of Musk’s wishes: for Tesla to take a stake in xAI. Musk has a history of using equity from his many businesses to fund each other. In addition to Tesla, those companies include SpaceX, xAI (which owns the social media platform X), Neuralink, and the Boring Co. His current main interests center around robotics and artificial intelligence.
Another condition is that Musk must work with the board on a succession plan. This is an interesting development given that Musk is the face of the company and Tesla’s profitability and popularity often ebb and flow based on his personal actions. Musk’s dive into politics in support of U.S. president Donald Trump caused schisms among consumers. Historically, whenever Musk has devoted more of his time and energy to other companies, such as his purchase of Twitter, which he transformed into X, it has negatively impacted shareholder confidence in Tesla.
“Simply put, retaining and incentivizing Elon is fundamental to Tesla achieving these goals and becoming the most valuable company in history,” Tesla said in a shareholder letter signed by chair Robyn Denholm and director Kathleen Wilson-Thompson.
Tesla has seen its fortunes decline this year, due in part to aging products, falling sales globally in the face of political turmoil in part brought on by Musk himself, regulatory changes, and increased competition in the EV market.