Tesla shareholders have overwhelmingly approved what could become the largest corporate pay package in history for Chief Executive Elon Musk, potentially paving his way to becoming the world's first trillionaire.
The Landmark Pay Deal
With 75% of shareholders voting in favour, the controversial 10-year agreement could see Musk earn up to $1 trillion (£761 billion) if Tesla meets a series of extremely ambitious targets. The 54-year-old, already the world's richest person with a net worth of $493 billion (£375 billion) according to Forbes, would see his ownership stake in the electric vehicle company potentially rise from 13% to nearly 29% as he hits performance milestones.
Ambitious Performance Targets
The pay package comes with significant strings attached. Musk must deliver 20 million Tesla vehicles over the next decade - more than double the number produced in the past 12 years. He also faces the challenge of dramatically increasing the company's valuation and operating profits while rolling out one million AI-powered robots, despite Tesla not having released a single robot to date.
Another key requirement is for Musk to develop a succession plan identifying who will eventually replace him as Tesla's chief executive. As each target is successfully completed, he will receive additional company shares, building toward what could be historic wealth accumulation.
Board Support and Investor Opposition
Tesla's board of directors strongly backed the package, arguing that keeping Musk motivated is critical for the company's future. Financial services firm Wedbush stated that additional shares are "critical to keep Musk at the helm to lead Tesla through the most critical time in the company's history," particularly with the AI revolution and Tesla's ambitions in autonomous driving and robotics.
However, not all investors supported the move. Major advisory firm Institutional Shareholder Services (ISS) warned that the agreement reduces the board's flexibility to adjust pay levels in response to unforeseen events. ISS also expressed concern that the goals "lack precision" and that the high value of each tranche could potentially undermine Musk's motivation to achieve all targets. Musk has previously described ISS and another major adviser, Glass Lewis, as "corporate terrorists."
There had been speculation that Musk might walk away from Tesla if the package wasn't approved, adding urgency to the shareholder vote. Even if Musk falls short of some targets, he stands to earn substantial additional compensation, though hitting all milestones would see him surpass John D. Rockefeller's inflation-adjusted wealth of $630 billion (£480 billion) to become the richest person in history.
