Tesla shareholders will vote today on whether or not to approve a pay package for CEO Elon Musk that could end up being worth over US$1 trillion.
Driving the news: Tesla’s board has warned that if the package is shot down, Musk could step down from the role. Prominent shareholders including Norway’s sovereign wealth fund and major U.S. pension fund CalPERS already announced they will vote against it.
Zoom in: The package would increase Musk’s current Tesla stake of ~15% to ~25% over 10 years if he hits all of its targets, which include lofty goals like Tesla’s market cap reaching $8.5 trillion (currently at $1.5 trillion) and selling 1 million Optimus robots (currently at zero).
- Even if he doesn’t achieve everything, Musk is still in line to rack up tens of billions by attaining more modest vehicle sales and market valuation growth targets.
Why it matters: The vote is a referendum on Musk’s leadership. For some shareholders, the package is too risky and goes against all standards of responsible governance. This is doubly true for Musk, an erratic figure whose attention is split on many different endeavours (some of them quite unsavoury).
Yes, but: Tesla’s valuation lies not in its current EV biz — which isn’t doing too hot — but the promises of its future, which many believe is inextricably tied to Musk. His departure would almost certainly lead to a devastating drop in Tesla shares that may never recover.—QH