The package aims to ensure Musk stays at Tesla for at least seven-and-a-half years. It would lift Musk’s holding in Tesla from about 12% when the package was introduced in September to potentially more than 25%.
Musk has described Tesla’s potential growth as nearly boundless, saying in July that it “will be the most valuable company in the world by far” if it delivers on envisioned advances on autonomous driving and AI.
But Musk himself has hinted he could leave Tesla or take a back seat if his ownership share is not raised enough to give him the influence over its future that he desires.
In urging shareholders to back the proposal, Tesla chair Robin Denholm argued keeping Musk was essential to Tesla’s future, warning the company’s stock could dive if he exited.
The board has shrugged off criticism that the billionaire’s embrace of contentious political figures has weighed on sales.
Base of shareholder support
Tesla investors have been reliable Musk supporters in past votes over Musk’s pay packages, including a 2018 deal for about US$55.8 billion that has repeatedly been blocked by a Delaware court in response to shareholder litigation.
Following the latest Delaware ruling, Denholm and the rest of Tesla’s board went back to the drawing board, first approving in August an “interim” compensation award worth about US$29b for Musk and then unveiling the larger plan in September.
Once again this week, Tesla shareholders signed off on stratospheric pay for Musk and also handed the company victories on other key votes, including the reelection of board members.
But Tesla Takedown, an activist group, blasted the vote result, noting the company’s drop in auto sales in recent quarters.
“Elon Musk just got one trillion dollars for failure,” said the group, which rallied against the plan in downtown Austin.
“Sales are down, safety risks are up and his politics are driving customers away. This isn’t leadership – it’s the world’s most expensive participation trophy.”
On the other side, Wedbush analyst Dan Ives said the sweeping vote in favour of Musk cements his position as “the AI Revolution takes hold, giving us greater confidence in the Tesla story moving forward”.
Musk, with a net worth of more than US$500b, is already the world’s richest person, according to Forbes’s real-time list of billionaires.
He must hit 12 milestones related to market capitalisation to receive the full pay package. The first tranche would be available when Tesla reaches US$2t in market value, up from its current US$1.5t.
The plan also involves a series of operating profit and product goals, such as the delivery of 20 million Tesla vehicles.
The pay proposal was panned by Glass Lewis and Institutional Shareholder Services (ISS).
An ISS analysis last month criticised the rationale for the potential windfall, noting that Musk’s financial interests are already closely tied to Tesla’s fate.
As structured, the separation of the overall package into tranches of “unprecedented” value “could undermine the necessity for all goals to be realised,” said ISS, which also flagged the lack of explicit requirements that the busy Musk keep focused on Tesla.
-Agence France-Presse