Tesla shareholders approve Elon Musk’s $1T pay package

Tesla shareholders have overwhelmingly approved a compensation package for CEO Elon Musk that could be worth as much as $1 trillion in company shares.

More than 75% of shareholders who participated voted to approve the plan, in line with the amount of support Musk has received for past pay packages. As the result was announced, shareholders in the room at Tesla’s Austin, Texas, factory began chanting: “Elon! Elon!”

Flanked by dancing Optimus robots, Musk said Thursday that “what we’re about to embark upon is not merely a new chapter of the future of Tesla, but a whole new book.”

Under the deal, Musk will not be awarded $1 trillion right away. Nor will he receive a salary. But he stands to make hundreds of billions of dollars and gain more control of Tesla if he helps the company achieve a number of milestones and boost its profits along the way. Some of those hurdles will be difficult to clear. Many, though, are simply watered down versions of promises Musk has made for years.

The pay package is broken into 12 tranches — covering operational, adjusted profit, and market capitalization goals — each one giving more shares to Musk if those goals are reached. For instance, Tesla, which today has a market capitalization of about $1.5 trillion, will need to steadily increase that valuation and hit $8.5 trillion in a decade.

The vote followed two months of aggressive campaigning by Tesla, its board of directors, and many of its executives. The company repeatedly fired off public appeals for shareholders to approve the package. Chairwoman Robyn Denholm, who is typically media-shy, did multiple interviews with major news outlets and had lost some of her voice before addressing investors at Thursday’s meeting. Tesla even ran television advertisements about the vote — something it doesn’t even do for its cars.

“Tesla is at an inflection point — I think I’ve said that 3,000 times over the last few weeks — and this last year has been a critical one in our history,” Denholm said Thursday.

Musk encouraged shareholders to approve the package because, he claimed, it was the easiest way to hand him more voting control over the company. He currently owns around 15%, but he’s threatened (multiple times) to leave Tesla if he doesn’t wind up with around 25% control. That amount would insulate him from being pushed out and losing control of the “robot army” Tesla is building, Musk has said.

Tesla stumped for the package in part by holding up the company’s “Master Plan 4” as a visionary statement for where Musk can lead things. That document, released in September, was gauzy and unspecific — a criticism Musk even agreed with. He claimed Tesla would add more specifics to the “Plan” just a few days after it was released, but nothing has changed in the intervening months.

Tesla’s board of directors put this pay package forward in large part because the previous plan from 2018 (worth around $56 billion) was struck down by Delaware’s Chancery Court last year, after a judge ruled the company was not transparent about the negotiation process. Tesla has appealed the decision.

Earlier this year, Tesla handed Musk $29 billion in shares to make up for the loss of the 2018 package, but said it would essentially void that amount should Tesla win on appeal.