On Thursday, Tesla shareholders will decide the fate of a massive pay package intended to keep Elon Musk at the company long enough to achieve the technological breakthroughs he promises will change the world.
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AFP reports: Musk, who boasts that Tesla’s prowess in artificial intelligence, autonomy, and robotics will surpass that of rival tech giants, stands to gain as much as $1 trillion in an unprecedented package tied to performance benchmarks.
In a sign of the board’s continued enthusiastic backing for Musk, Tesla Chair Robin Denholm has appeared on CNBC and other broadcasts in recent weeks to sell the plan, despite criticism that the billionaire’s embrace of far-right political figures has weighed on sales.
"Without Elon, Tesla could lose significant value, as our company may no longer be valued for what we aim to become: a transformative force reimagining the fundamental building blocks of mobility, energy, and labor," Denholm wrote in a message to shareholders on October 27.
Musk himself has hinted that he could leave Tesla or take a back seat if his ownership stake is not increased enough to give him the desired influence over the company's future.
The package could increase Musk’s stake in Tesla to over 25 percent from its current level of over 12 percent.
“It’s not like I’m going to spend the money,” Musk said on a conference call in October. "It's just that if we build this robot army, I want to have at least a strong influence over it."
The outcome of the vote will be announced at the annual shareholder meeting at Tesla’s factory in Austin, Texas, on Thursday.
Anti-Musk protesters are planning a demonstration outside the Tesla gigafactory that day after an anti-Musk rally in downtown Austin on Wednesday.
“A trillion dollars is way too much for anyone to have under any circumstances,” activist Ethan McBride told AFP. He called the package a means of “enriching the man who is funding the degradation of our democracy.”
– Norway fund says no –
According to Forbes' real-time list of billionaires, Musk is already the world’s richest person with a net worth of more than $500 billion.
He must hit 12 milestones related to market capitalization to receive the full pay package. The first tranche would be available when Tesla reaches $2 trillion in market value.
The plan also involves a series of operating profit and product goals, such as delivering 20 million Tesla vehicles. The package aims to ensure that Musk stays at Tesla for at least seven and a half years.
In July, Musk described Tesla’s potential growth as nearly boundless and said that “Tesla will be the most valuable company in the world by far” if the company delivers on its vision for autonomous driving and artificial intelligence.
Musk’s success in growing Tesla, SpaceX, and other ventures has inspired many. However, skeptics have complained that Tesla has been slow to introduce new models and that Musk has a tendency to push back or fail to deliver on ambitious targets.
The pay proposal has been criticized by Glass Lewis and Institutional Shareholder Services (ISS), two advisory firms that Musk has referred to as “corporate terrorists.”
In an October 17 analysis, ISS criticized the rationale for the potential windfall, noting that Musk’s financial interests are already closely tied to Tesla’s fate.
ISS also noted that, as structured, separating the overall package into tranches of “unprecedented” value “could undermine the necessity for all goals to be realized” and flagged the lack of explicit requirements for Musk to stay focused on Tesla.
This week, Norway’s sovereign wealth fund, one of Tesla’s 10 largest shareholders, said it was voting no.
"While we appreciate the significant value created under Mr. Musk’s visionary leadership, we are concerned about the size of the award, the dilution, and the lack of mitigation of key person risk, which is consistent with our views on executive compensation," Norges Bank Investment Management wrote on its website.
Others who voted against the proposal include New York State Comptroller Thomas DiNapoli.
Meanwhile, Florida state officials endorsed the plan, citing Musk’s track record of creating equity value and calling the package the “gold standard for executive compensation.”