Musk set to become world's first trillionaire as Tesla approves pay package

Tesla shareholders on Thursday (November 6) voted overwhelmingly at the company’s annual meeting in Austin, Texas, to grant Elon Musk, the company's CEO, enough stock to potentially make him history's first trillionaire.

The huge pay package would increase Musk’s holding in Tesla from about 12 per cent to potentially more than 25 per cent.

A jubilant Musk told the shareholders, “I’d like to just give a heartfelt thanks to everyone who supported the shareholder votes. I super appreciate it.”

The package that has been agreed upon aims to ensure that Musk remains with Tesla for at least the next seven-and-a-half years.

Tesla chairperson Robyn Denholm during the meeting urged the shareholders to back the proposal, arguing that retaining Musk in the company was essential to Tesla’s future, and warned that the company’s share value could deteriorate if he left the company.

Musk’s threat to leave

The Tesla CEO had earlier hinted that he could leave the company or take a backseat if his share of the ownership was not raised sufficiently to give him the influence he wishes over its future.

Supporters say Musk is a genius who is the only person capable of ushering in a Tesla-dominated future in which hundreds of thousands of self-driving Tesla cars - many without steering wheels - will ferry people, and humanoid Tesla robots will march around factories and homes, picking up boxes and watering plants. The pay is necessary to incentivise him, they say, and keep him focussed.

Also Read: Elon Musk's net worth hits $500 billion, halfway to becoming the first trillionaire

Many investors have come out in support of the package, including Baron Capital Management, whose founder called Musk indispensable to the company.

“Without his relentless drive and uncompromising standards, there would be no Tesla," wrote founder Ron Baron.

Wedbush analyst Dan Ives said the sweeping vote in Musk’s favour cements his position as the AI Revolution takes hold, giving us greater confidence in the Tesla story moving forward.

What Musk has to deliver

Musk has to achieve 12 targets connected to the market capitalization of Tesla in order to receive the full pay package.

He will receive the first trance when the company reaches a market capitalization of $2 trillion, up from its current $1.5 trillion.

Also Read: Tesla shares fall in premarket session after Musk launches ‘America Party’

Musk has to deliver to the market 20 million Tesla vehicles over 10 years, more than double the number he has churned out over the past dozen years.

He also has to massively increase the company’s operating profits and deliver one million robots, from zero today.

What the critics have to say

An activist group, Tesla Takedown, slammed the vote result, pointing out to the drop in sales of Tesla vehicles in recent quarters.

“Elon Musk just got one trillion dollars for failure,” said the group, which had campaigned against the pay package in 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,” said Tesla Takedown.

Also Read: Elon Musk predicts AI will replace all jobs, ‘working will be optional’

Critics include Calpers, Norway's sovereign wealth fund, the world's largest. They argue the pay is excessive, with the Norway fund expressing concern that the board that designed it, which includes Musk's brother, is not independent enough.

That echoes a decision from a Delaware court nearly two years ago that blasted the process for approving a previous Musk pay package as “deeply flawed” given his “extensive ties” to directors.