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Tesla investors back Musk pay despite his busy schedule running other companies.
Credit: Aurich Lawson / Duncan Hull / Getty
Tesla shareholders today voted to approve a compensation plan that would pay Elon Musk more than $1 trillion over the next decade if he hits all of the plan’s goals. Musk won over 75 percent of the vote, according to the announcement at today’s shareholder meeting.
The pay plan would give Musk 423,743,904 shares, awarded in 12 tranches of 35,311,992 shares each if Tesla achieves various operational goals and market value milestones. Goals include delivering 20 million vehicles, obtaining 10 million Full Self-Driving subscriptions, delivering 1 million “AI robots,” putting 1 million robotaxis in operation, and achieving a $400 billion adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization).
Musk has threatened to leave if he doesn’t get a larger share of Tesla. He told investors last month, “It’s not like I’m going to go spend the money. It’s just, if we build this robot army, do I have at least a strong influence over that robot army? Not control, but a strong influence. That’s what it comes down to in a nutshell. I don’t feel comfortable building that robot army if I don’t have at least a strong influence.”
The plan has 12 market capitalization milestones topping out at $8.5 trillion. The value of Musk’s award is estimated to exceed $1 trillion if he hits all operational and market capitalization goals. Musk would increase his ownership stake to 24.8 percent of Tesla, or 28.8 percent if Tesla ends up winning an appeal in the court case that voided his 2018 pay plan.
Tesla Chair Robyn Denholm has argued that Musk needs big pay packages to stay motivated. Some investors have said $1 trillion is too much for a CEO who spends much of his time running other companies such as SpaceX, X (formerly Twitter), and xAI.
New York Comptroller Thomas DiNapoli, who runs a state retirement fund that owns over 3.3 million shares, slammed the pay plan in a webinar last week. He said that Musk’s existing stake in Tesla should already “be incentive enough to drive performance. The idea that another massive equity award will somehow refocus a man who is hopelessly distracted is both illogical and contrary to the evidence. This is not pay for performance; this is pay for unchecked power.”
Musk and his side hustles
With Musk spending more time at xAI, “some major Tesla investors have privately pressed top executives and board members about how much attention Musk was actually paying to the company and about whether there is a CEO succession plan,” a Wall Street Journal article on Tuesday said. “An unusually large contingent of Tesla board members, including chair Robyn Denholm, former Chipotle CFO Jack Hartung and Tesla co-founder JB Straubel, met with big investors in New York last week to advocate for Musk’s proposed new pay package.”
Denholm told the Journal that the board isn’t concerned about Musk devoting so much time to other companies. “Other CEOs might like to play golf. He doesn’t play golf. So, he likes to create companies, and they’re not necessarily Tesla companies,” she said.
Tesla argued in a presentation for investors that “Elon earns nothing” if he fails to meet the “incredibly ambitious” goals, while hitting the goals would make Tesla “more valuable than any company in history” and let shareholders “benefit from unprecedented growth and value creation.”
But Musk won’t walk away with nothing if Tesla fails to meet most of the goals. A recent Reuters report said that Musk “could collect more than $50 billion by hitting a handful of the board’s easier goals that won’t necessarily revolutionize Tesla’s products or business.”
Denholm pleaded with shareholders in an October 27 letter. “The fundamental question for shareholders at this year’s Annual Meeting is simple: Do you want to retain Elon as Tesla’s CEO and motivate him to drive Tesla to become the leading provider of autonomous solutions and the most valuable company in the world?” she wrote.
Shareholder advocate James McRitchie said at today’s meeting that “Tesla is his only publicly traded company. It’s the liquid piggy bank that fuels his other ventures.
, Elon Musk is brilliant. But no company should depend on a single personality. Either he stays long enough to keep using your capital elsewhere, or he moves on when the tap runs dry.”
Voided 2018 pay plan still looms
Denholm’s letter stressed Musk’s importance to the company even though he only devotes part of his working time to Tesla. “Though it’s no question that Elon has other pursuits, he has proven that one of the many things that make him unique is his ability to stretch his capacity beyond normal limits and remain successful at Tesla,” she wrote. “However, if we fail to foster an environment that motivates Elon to achieve great things through an equitable pay-for-performance plan, we run the risk that he gives up his executive position, and Tesla may lose his time, talent and vision, which have been essential to delivering extraordinary shareholder returns.”
Nancy Tengler, CEO and chief investment officer of Laffer Tengler Investments, explained why her firm is comfortable with the pay package. “If the stock is going to go up sixfold—and that’s a requirement here—then I’m going to make a lot of money,” Tengler told Reuters. “Why do I care what kind of money he makes if he’s effecting the change and the vision?”
Musk’s 2018 pay plan was voided in January 2024 by a Delaware judge who found, in response to a shareholder lawsuit, that most of the Tesla board members were beholden to Musk or had compromising conflicts. The 2018 plan was worth about $56 billion at the time.
In August this year, Tesla awarded Musk over $29 billion of stock in an “interim” pay plan designed to maintain his interest in the company while his 2018 pay plan remained held up in court. The interim plan was for 96 million shares, while the 2018 plan included almost 304 million shares.
The Delaware case prompted Tesla to move its corporate headquarters to Texas, where state law lets Musk and his brother Kimbal to vote their shares on the pay package during the shareholder vote. Musk already owns 15 percent of Tesla, giving him a large influence over the outcome of the vote.
Dissenting votes
Norway’s $2 trillion sovereign wealth fund, which owns 1.14 percent of Tesla, revealed that it voted against the Musk pay plan. “While we appreciate the significant value created under Mr. Musk’s visionary role, we are concerned about the total size of the award, dilution, and lack of mitigation of key person risk—consistent with our views on executive compensation,” fund manager Norges Bank Investment Management said in a statement.
Proxy advisory firm Institutional Shareholder Services (ISS) recommended that its clients reject the pay package. The firm said the Musk award is designed “to retain Musk and keep his time and attention on Tesla instead of his other business ventures,” but “there are no prescriptive elements within the award to ensure his focus and time remain on Tesla as opposed to his other ventures, undermining the award’s primary rationale.”
As CNBC notes, “The pay plan doesn’t require him to dedicate a minimum amount of time to Tesla, nor does it at all limit his involvement in politics.” CNBC quoted one pay-plan opponent describing Musk as a part-time CEO:
Nell Minow, a corporate governance expert and chair of ValueEdge Advisors, said she would vote against the new pay plan for Musk, describing him as a “part-time CEO” today.
“If they said we’re going to pay him a trillion dollars, but he’s going to give up all of his outside activities, he’s going to shut up about politics, and really spend all this time making this a great company, then I’d say, OK, let’s talk about it,” Minow said. “But he’s not doing any of those things.”
Tesla investor Baron Capital voted for Musk’s pay plan. Founder and CEO Ron Baron wrote in an X post that Tesla shareholders would benefit from the plan before Musk does if the company reaches the “aggressive market cap objectives that few believe can be attained.”
“The plan ensures that shareholders win first, and that Elon Musk continues to lead Tesla for many years to come,” Baron wrote. “We commend the Board for recognizing this and for working to retain Tesla’s most valuable asset.. Tesla’s success and its future are inseparable from Elon.”
Credit: Aurich Lawson / Duncan Hull / Getty
Tesla shareholders today voted to approve a compensation plan that would pay Elon Musk more than $1 trillion over the next decade if he hits all of the plan’s goals. Musk won over 75 percent of the vote, according to the announcement at today’s shareholder meeting.
The pay plan would give Musk 423,743,904 shares, awarded in 12 tranches of 35,311,992 shares each if Tesla achieves various operational goals and market value milestones. Goals include delivering 20 million vehicles, obtaining 10 million Full Self-Driving subscriptions, delivering 1 million “AI robots,” putting 1 million robotaxis in operation, and achieving a $400 billion adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization).
Musk has threatened to leave if he doesn’t get a larger share of Tesla. He told investors last month, “It’s not like I’m going to go spend the money. It’s just, if we build this robot army, do I have at least a strong influence over that robot army? Not control, but a strong influence. That’s what it comes down to in a nutshell. I don’t feel comfortable building that robot army if I don’t have at least a strong influence.”
The plan has 12 market capitalization milestones topping out at $8.5 trillion. The value of Musk’s award is estimated to exceed $1 trillion if he hits all operational and market capitalization goals. Musk would increase his ownership stake to 24.8 percent of Tesla, or 28.8 percent if Tesla ends up winning an appeal in the court case that voided his 2018 pay plan.
Tesla Chair Robyn Denholm has argued that Musk needs big pay packages to stay motivated. Some investors have said $1 trillion is too much for a CEO who spends much of his time running other companies such as SpaceX, X (formerly Twitter), and xAI.
New York Comptroller Thomas DiNapoli, who runs a state retirement fund that owns over 3.3 million shares, slammed the pay plan in a webinar last week. He said that Musk’s existing stake in Tesla should already “be incentive enough to drive performance. The idea that another massive equity award will somehow refocus a man who is hopelessly distracted is both illogical and contrary to the evidence. This is not pay for performance; this is pay for unchecked power.”
Musk and his side hustles
With Musk spending more time at xAI, “some major Tesla investors have privately pressed top executives and board members about how much attention Musk was actually paying to the company and about whether there is a CEO succession plan,” a Wall Street Journal article on Tuesday said. “An unusually large contingent of Tesla board members, including chair Robyn Denholm, former Chipotle CFO Jack Hartung and Tesla co-founder JB Straubel, met with big investors in New York last week to advocate for Musk’s proposed new pay package.”
Denholm told the Journal that the board isn’t concerned about Musk devoting so much time to other companies. “Other CEOs might like to play golf. He doesn’t play golf. So, he likes to create companies, and they’re not necessarily Tesla companies,” she said.
Tesla argued in a presentation for investors that “Elon earns nothing” if he fails to meet the “incredibly ambitious” goals, while hitting the goals would make Tesla “more valuable than any company in history” and let shareholders “benefit from unprecedented growth and value creation.”
But Musk won’t walk away with nothing if Tesla fails to meet most of the goals. A recent Reuters report said that Musk “could collect more than $50 billion by hitting a handful of the board’s easier goals that won’t necessarily revolutionize Tesla’s products or business.”
Denholm pleaded with shareholders in an October 27 letter. “The fundamental question for shareholders at this year’s Annual Meeting is simple: Do you want to retain Elon as Tesla’s CEO and motivate him to drive Tesla to become the leading provider of autonomous solutions and the most valuable company in the world?” she wrote.
Shareholder advocate James McRitchie said at today’s meeting that “Tesla is his only publicly traded company. It’s the liquid piggy bank that fuels his other ventures.
, Elon Musk is brilliant. But no company should depend on a single personality. Either he stays long enough to keep using your capital elsewhere, or he moves on when the tap runs dry.”Voided 2018 pay plan still looms
Denholm’s letter stressed Musk’s importance to the company even though he only devotes part of his working time to Tesla. “Though it’s no question that Elon has other pursuits, he has proven that one of the many things that make him unique is his ability to stretch his capacity beyond normal limits and remain successful at Tesla,” she wrote. “However, if we fail to foster an environment that motivates Elon to achieve great things through an equitable pay-for-performance plan, we run the risk that he gives up his executive position, and Tesla may lose his time, talent and vision, which have been essential to delivering extraordinary shareholder returns.”
Nancy Tengler, CEO and chief investment officer of Laffer Tengler Investments, explained why her firm is comfortable with the pay package. “If the stock is going to go up sixfold—and that’s a requirement here—then I’m going to make a lot of money,” Tengler told Reuters. “Why do I care what kind of money he makes if he’s effecting the change and the vision?”
Musk’s 2018 pay plan was voided in January 2024 by a Delaware judge who found, in response to a shareholder lawsuit, that most of the Tesla board members were beholden to Musk or had compromising conflicts. The 2018 plan was worth about $56 billion at the time.
In August this year, Tesla awarded Musk over $29 billion of stock in an “interim” pay plan designed to maintain his interest in the company while his 2018 pay plan remained held up in court. The interim plan was for 96 million shares, while the 2018 plan included almost 304 million shares.
The Delaware case prompted Tesla to move its corporate headquarters to Texas, where state law lets Musk and his brother Kimbal to vote their shares on the pay package during the shareholder vote. Musk already owns 15 percent of Tesla, giving him a large influence over the outcome of the vote.
Dissenting votes
Norway’s $2 trillion sovereign wealth fund, which owns 1.14 percent of Tesla, revealed that it voted against the Musk pay plan. “While we appreciate the significant value created under Mr. Musk’s visionary role, we are concerned about the total size of the award, dilution, and lack of mitigation of key person risk—consistent with our views on executive compensation,” fund manager Norges Bank Investment Management said in a statement.
Proxy advisory firm Institutional Shareholder Services (ISS) recommended that its clients reject the pay package. The firm said the Musk award is designed “to retain Musk and keep his time and attention on Tesla instead of his other business ventures,” but “there are no prescriptive elements within the award to ensure his focus and time remain on Tesla as opposed to his other ventures, undermining the award’s primary rationale.”
As CNBC notes, “The pay plan doesn’t require him to dedicate a minimum amount of time to Tesla, nor does it at all limit his involvement in politics.” CNBC quoted one pay-plan opponent describing Musk as a part-time CEO:
Nell Minow, a corporate governance expert and chair of ValueEdge Advisors, said she would vote against the new pay plan for Musk, describing him as a “part-time CEO” today.
“If they said we’re going to pay him a trillion dollars, but he’s going to give up all of his outside activities, he’s going to shut up about politics, and really spend all this time making this a great company, then I’d say, OK, let’s talk about it,” Minow said. “But he’s not doing any of those things.”
Tesla investor Baron Capital voted for Musk’s pay plan. Founder and CEO Ron Baron wrote in an X post that Tesla shareholders would benefit from the plan before Musk does if the company reaches the “aggressive market cap objectives that few believe can be attained.”
“The plan ensures that shareholders win first, and that Elon Musk continues to lead Tesla for many years to come,” Baron wrote. “We commend the Board for recognizing this and for working to retain Tesla’s most valuable asset.. Tesla’s success and its future are inseparable from Elon.”
