Tesla shareholders are voting this week on a $1T compensation package for CEO Elon Musk.
Context
Elon Musk’s pay packages have been a recurring source of debate, including one $56B package that a Delaware court recently struck down, ruling that Tesla's board lacked independence from Musk.
This month, Tesla’s board will vote on Musk’s most controversial package yet: A package worth $1T if Musk hits a series of ambitious goals.
Goals
The $1T award would be split over 12 bonuses contingent on Musk hitting certain goals. To receive the full package, Tesla would have to reach a $8.5T market cap (up from $1.5T today), deliver 1M robots, have 1M Robotaxis in commercial operation, and deliver 20M Tesla vehicles.
Tesla shareholders are scheduled to vote on the package at the company's annual meeting on Thursday.
Political Split
Tesla's board has created a website and run video ads promoting the pay plan, while Musk has posted about the vote more than 60 times in recent months.
Tesla’s Board Chair Robyn Denholm warned shareholders in a letter that Musk might quit if they rejected the plan: “We run the risk that he gives up his executive position, and Tesla may lose his time, talent and vision,” she wrote.
The vote has seemingly divided shareholders along political lines. Government pension fund managers in Democratic-led states like California and New York have opposed the pay plan, while those in Republican-run states like Florida have supported it.
New York City’s comptroller said approving the package would “revive the era of robber barons who wielded near-absolute control.” Even Pope Leo XIV commented on Musk's pay as an example of wealth inequality, saying, “If that is the only thing that has value anymore, then we're in big trouble.”
Board Concerns
Analysts have questioned whether Tesla's board can fairly judge Musk's performance: The board includes Musk's brother and several longtime friends and business associates. The plan would allow the board to give Musk portions of his pay even if he misses his goals due to events like natural disasters or government interference. One advisory firm said Musk could earn tens of billions of dollars without meeting a single performance target.
