Copyright CNBC
Tesla said shareholders voted in favor of CEO Elon Musk's almost $1 trillion pay plan, with 75% support. Board members recommended shareholders approve the pay plan, which they introduced in September. Top proxy advisors Glass Lewis and ISS recommended voting against it. Results of the vote were announced on Thursday at the company's annual shareholders meeting in Austin, Texas. The package for Musk, already the world's richest person, consists of 12 tranches of shares to be granted if Tesla hits certain milestones over the next decade. It would also give Musk increased voting power over the company, acceding to demands that he's made publicly since early 2024. The full award would give Musk, who already holds about 13% of the EV maker, more than 423 million additional shares and take his stake to about 25%. Musk would receive the first tranche of stock if Tesla hits a market capitalization of $2 trillion. Tesla's current market cap is $1.54 trillion. The next nine tranches would be awarded if Tesla's value increases by increments of $500 billion, up to $6.5 trillion. Musk would earn the last two tranches if the market cap rises by increments of $1 trillion, meaning it would need to hit $8.5 trillion for Musk to get the full package. Other goals tied to the pay plan include reaching 20 million vehicle deliveries, 10 million active FSD subscriptions, 1 million bots delivered and 1 million robotaxis in commercial operation. To date, Tesla has delivered more than 8 million vehicles, according to its September proxy statement. The proposed plan doesn't specify whether the FSD subscriptions must be purchased or could include free trials. Tesla currently provides partially automated driving systems, which it markets as "FSD Supervised" in the U.S. The company intends to improve its FSD Supervised systems so they don't require human supervision on board. Tesla also laid out a series of earnings milestones, beginning with $50 billion in annual adjusted profit and moving up to $400 billion. In the third quarter, Tesla reported adjusted EBITDA of $4.2 billion. As Reuters previously reported, Musk could still score tens of billions of dollars without meeting most of the targets laid out for him by the board, collecting more than $50 billion just by hitting a handful of the more attainable goals. There are also a list of "covered events" in the award terms that would allow Musk to earn shares without meeting the required operational milestones. Covered events include natural disasters, wars, pandemics, and changes to "international, federal, state and local law, regulations or other governmental action or inaction," that could hamper the company's ability to design, manufacture or sell its products down the line. Shareholders voted on the plan after the Delaware Court of Chancery ruled last year that Musk's earlier 2018 pay plan was improperly granted by the Tesla board and must be rescinded. Musk appealed that ruling and the matter will be decided by the Delaware State Supreme Court. In addition to leading Tesla, Musk runs xAI which has merged with X, leads SpaceX and its satellite internet business Starlink, and is a founder of brain computer interface company Neuralink and tunneling venture The Boring Company. He's also been heavily engaged in politics, most notably working to propel President Donald Trump back to the White House, and then leading a sweeping effort to slash the federal government at the beginning of his second term. This is breaking news. Please refresh for updates.
