Copyright Newsweek
A pay package that could see Elon Musk earning up to $1 trillion over 10 years has been approved by Tesla shareholders. At Tesla's annual meeting in Austin, Texas, on Thursday, shareholders of Musk's company approved the package, which could renumerate the CEO to the tune of $1 trillion over a decade if he grows the company in that period and meets certain targets. Newsweek has contacted Tesla for comment by email. Why It Matters Musk, the world's wealthiest person, has attracted increased scrutiny in recent years, particularly after his foray into politics. In January, he became a key member of the Trump administration as the head of the Department of Government Efficiency, an initiative tasked with curbing government spending and cutting the federal workforce. While he stepped away from the role in May with a pledge to focus on his businesses, the billionaire remains an influential political force in the United States and abroad. The newly approved deal would make Musk richer and give him more influence not only over the company's direction but also on the world stage. What To Know Under the new package, Musk will receive an additional 12 percent stake in Tesla if he grows the company to an $8.5 trillion valuation in the next decade. This stake, which could be worth $1 trillion, is more than eight times its current valuation. The company would also have to hit other milestones for Musk to receive the payout, including delivering 20 million Tesla vehicles and growing the subscriber base of Tesla's full self-driving service. Musk has a voting stake of about 15 percent and is Tesla's largest shareholder. The proposal also garnered the support of Morgan Stanley's Counterpoint Global fund and Florida's public pension fund. Charles Schwab and Baron Capital Management also announced on Tuesday that they would vote in favor of the package. However, it did not receive unanimous support. On Tuesday, Norway's sovereign-wealth fund Norges Bank Investment Management, which has a 1.2 percent stake in the company, said it was voting against the proposal, citing concerns about the size of the package and what it deemed a "lack of mitigation of key person risk." Other pension funds—including the American Federation of Teachers—and the proxy advisory firms Institutional Shareholder Services and Glass Lewis also came out against the proposal. The vote on the potential pay package comes after a legal battle over Musk's previous $56 billion compensation plan from 2018, which a Delaware court struck down last year. Shareholders later reapproved it in a nonbinding vote. A final ruling from the Delaware Supreme Court is expected soon. Earlier this year, Tesla investors called on Musk to work at least 40 hours a week at the company, citing concerns about the company's share value and reputation. According to an Axios Harris Poll of public perceptions of the 100 most visible U.S. companies, Tesla is the 95th most popular American brand. It previously ranked eighth. In April, sales of the vehicles made by the U.S. company dropped 49 percent compared to the same time last year, and its stock price has fluctuated. What People Are Saying Norges Bank Investment Management said in a statement: "While we appreciate the significant value created under Mr. Musk's visionary role, we are concerned about the total size of the award, dilution, and lack of mitigation of key person risk—consistent with our views on executive compensation." Charles Schwab said in a statement: "We firmly believe that supporting this proposal aligns both management and shareholder interests, ensuring the best outcome for all parties involved." Baron Capital Management said on X: "Elon is the ultimate 'key man' of key man risk. Without his relentless drive and uncompromising standards, there would be no Tesla. He has built one of the most important companies in the world. He's redefining transportation, energy and humanoid robotics and creating lasting value for shareholders while doing it. His interests are completely aligned with investors." What Happens Next Though the deal has been approved, it remains to be seen whether Musk will hit the necessary targets to receive the payout.
