‘I super appreciate it’: Elon Musk wins $US1 trillion Tesla pay deal despite backlash

Tesla shareholders approved a $US1 trillion ($1.5 trillion) compensation package for chief executive officer Elon Musk, the largest payout ever awarded to a corporate leader.

More than 75 per cent of votes were cast in favour of the unprecedented pay plan, the company said on Thursday at its annual meeting. The outcome caps a weeks-long campaign by the electric vehicle maker’s board, its CEO and prominent retail investors to build support.

Musk took to the stage in Austin, Texas, along with dancing robots, and thanked shareholders for their support.

“I super appreciate it,” he said.

“What we are about to embark upon is not merely a new chapter of the future of Tesla, but a whole new book. This really is going to be quite the story.”

The pay agreement clears a path for Musk, the world’s richest person, to become the first-ever trillionaire and expand his stake in Tesla to 25 per cent or more over the next decade. To achieve the full payout, he’ll have to deliver on targets to significantly expand Tesla’s market value, revive its flagging car business and get the fledgling robotaxi and robotics efforts off the ground.

The compensation vote was pivotal for Tesla, after Musk suggested he could step down or spend more time with his other companies if he didn’t get greater control over the carmaker. He’s now likely to remain at the helm as Tesla pursues an ambitious agenda built around driverless vehicles and artificial intelligence.

Tesla shares were little changed at 5.15pm in post-market trading Thursday in New York, paring an earlier gain of as much as 3.4 per cent. The stock was up 14 per cent this year through Wednesday’s close, narrowly trailing the 16 per cent advance in the S&P 500 Index.

The package was widely expected to pass, even after several prominent investors came out in opposition, including Norway’s Norges Bank Investment Management, Tesla’s ninth-largest holder. Proxy advisers Institutional Shareholder Services and Glass Lewis recommended investors reject the compensation plan, citing concerns with its magnitude and its potential to dilute other shareholders’ ownership.

The board waged an aggressive effort to garner support, featuring meetings with large institutional shareholders and a series of media appearances by chair Robyn Denholm. In interviews with Bloomberg News, Denholm cast the vote as crucial to Tesla’s future, which needs an engaged Musk to achieve its goals.

Musk himself sought to rally support, using a portion of Tesla’s recent earnings call to lay out why he wasn’t comfortable building a “robot army” unless he owns a quarter of the company.

Schwab Asset Management earlier this week pledged to back the pay proposal after a number of prominent retail shareholders said on social media that they would move funds out of brokerages that voted in opposition. Several other institutional investors, including Florida’s State Board of Administration, said they would vote for the package.

The win gives Musk a clear, albeit challenging, path to becoming the world’s first trillionaire. Should he hit all of the targets in the plan, including expanding Tesla’s market value to $US8.5 trillion, his total stake in the carmaker would be worth roughly $US2.4 trillion.

That’s more than quintuple his current net worth of about $US460 billion, according to the Bloomberg Billionaires Index. His net worth would exceed the current gross domestic product of all but seven countries.

Up and down fortune

Musk’s fortune has been on a roller coaster ride this year. It stood at roughly $US450 billion in January when he joined President Donald Trump at his inauguration, but began a rapid decline as the CEO’s politics – including a prominent role at the Department of Government Efficiency – alienated many potential Tesla buyers. A subsequent feud between the two sent Tesla shares plummeting, leaving Musk with the second-worst single-day loss ever recorded by the Bloomberg Billionaires Index.

His wealth has since rebounded, helped by a recovery in Tesla shares as well as booming valuations for his privately held businesses including xAI and SpaceX.

The new package comes after Musk’s previous multibillion-dollar compensation plan was struck down by a Delaware judge last year. The company is appealing the ruling and has moved its incorporation to Texas, partly in response to the decision. In August, Tesla’s board also granted Musk an interim award valued at $US30 billion, designed to partially replace the payment.

Tesla said Thursday that it needs time to review the votes for a nonbinding shareholder proposal to invest in xAI, Musk’s artificial intelligence startup. Of the votes submitted, more were cast in favour of the plan than against it, but the volume of abstentions was so high that it merited further discussion, Tesla said.

The measure, calling for an investment “in an amount and form deemed appropriate by the board”, is advisory, meaning Tesla is not required to move ahead. Musk has been publicly supportive of an investment and floated the idea of a $US5 billion stake last year.

Bloomberg, wires

The Business Briefing newsletter delivers major stories, exclusive coverage and expert opinion. Sign up to get it every weekday morning.