Tesla shareholders vote in favour of Elon Musk's US$1 trillion pay deal

Tesla shareholders voted on Nov. 6 in favour of a compensation package that could make CEO Elon Musk the world’s first trillionaire.

About 75 per cent of Tesla shareholders voted in favour of the package approaching US$1 trillion (S$1.3 trillion), after Musk dared them to sack him or vote to give him a pay hike and the assurance of control over a company he has been overseeing.

Musk, 54, is already the world’s richest person with an estimated net worth of US$473 billion (S$617 billion), according to Bloomberg’s billionaire tracker, mostly due to his holdings in Tesla, as well as SpaceX and xAI, which he controls.

Musk appreciates it

The vote was taken during the company’s annual shareholder meeting.

The crowd at the meeting broke into cheers and chants when the results were announced.

Musk thanked the shareholders and the Tesla board.

“I super appreciate it,” he said.

Musk doesn't take any salary

In a filing, Tesla’s board said Musk had raised the possibility of leaving the company if he did not get the assurances of control that the pay package could grant him.

Musk does not take any salary.

What package entails

The approved pay package comes in the form of a stock grant.

Musk could be given as much as 423.7 million additional Tesla shares over the next 10 years.

Those shares could be worth about US$1 trillion (S$1.3 trillion) in the event the company reaches the US$8.5 trillion (S$11.1 trillion) market cap for Musk to qualify for the full potential payout.

Unlocking pay package requires meeting ambitious targets

CNN reported that even with the passage of the pay package, it is uncertain if Musk will see any of its potential hundreds of millions of shares.

This is so as unlocking the payout of the full number of shares requires Tesla to achieve a series of ambitious targets under Musk.

For context, Tesla shares need to jump 466 per cent from today’s stock price to reach an US$8.5 trillion (S$11.1 trillion) in market value.

That’s about 70 per cent higher than the world’s most valuable company, Nvidia, which hit a record US$5 trillion (S$6.5 trillion) market cap recently.

The payout will be distributed in 12 equal blocks.

His ownership would increase from about 13 per cent to 25 per cent, adding more than 423 million shares to his holdings, and give him increased voting power over the company.

Getting all the shares available under this package over the next 10 years would be the equivalent of earning S$275 million (S$359 million) a day.

This beats any executive pay package in history by a long way.

The first tranche of stock gets paid out if Tesla hits a market capitalization of US$2 trillion (S$2.6 trillion).

Tesla’s current market cap is US$1.54 trillion (S$2.01 trillion).

Awards tied to market cap gains are paired with operational achievements.

Musk: Robots the next big thing

In his remarks to shareholders, Musk spoke more about robots, which have yet to go on sale.

His references were mostly on Tesla's so-called full self-driving (FSD) mode, which is a driver assistance feature that still requires drivers to be ready to take control of the cars.

Musk added that robots will be bigger than the company’s car business, or any other business.

He said: “I think it’s going to be the biggest product of all time by far.”

“So like bigger than cell phones, bigger than anything. I guess a way to think about it is that every human on Earth is going to want to have their own personal R2D2 or C3PO,” he added.

He claimed they could be produced for US$20,000 (S$26,100) each.

However, the robots have not gone on sale and the concept is still under development.

Top photo via Tesla