Tesla Shareholders Approve Massive Compensation Package For Elon Musk

Elon Musk's inspiration for his lunar base

Musk could own as much as US$55.8 billion in Tesla stock and more than a quarter of the electric vehicle company in the next decade if he hits all targets of the new plan. Baillie Gifford and T. Rowe Price, both major holders of Tesla stock, have reportedly indicated they intend to support Musk's compensation package, although several proxy advisers have come out against it.

Tesla shareholders have agreed to a performance-related pay plan for CEO Elon Musk, promising him stock options valued at $2.6 billion if the electric-carmaker maintains its growth trajectory over the next decade.

It's unlikely Tesla could hit the top market value threshold of $650 billion exclusively by selling electric cars.

Each of the 12 tranches vests when Tesla hits a market cap milestone and one of the two kinds of operational milestones.

"We believe as a board and executive team that we can actually achieve these milestones", said board member Antonio Gracias, who points out that under a 2012 incentive package, Musk raised Tesla's market capitalization by 17 times to more than $50 billion a year ago. The firm now has a market capitalisation of about $55bn.

Supporters have said the plan will align Musk with shareholders and potentially greatly increase the company's value.

Musk is also CEO of SpaceX, the commercial rocket maker, and has multiple other ventures, including The Boring Co., which exploring whether burrowing under cities can become a high-speed transportation option. Last quarter, the company stated a quarterly EPS of 0.7.

The award, which won't vest unless a set of ambitious financial goals are met, had been cheered by some large Tesla investors who said it would help the CEO drive the business forward. "This is our ambition".

There's also the issue of production delays, which have occurred on all of Tesla's current vehicles. "They see a bigger opportunity over the long term, and that opportunity is figuring out the trifecta between energy capture, storage and use".

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More than half of Musk's roughly $20 billion fortune is tied up in Tesla stock.

But some analysts are sceptical of the plan. SELL rating has been given by 4 analyst (s) and 5 analyst (s) given BUY rating to the stock. "Given the size of the award, we believe the potential dilution to shareholders is just too great". "Still, we question why Musk has to be incentivised so highly given his high equity interest in TSLA and risks to his personal reputation".

The vote passed despite strong opposition from two proxy advisory firms: Institutional Shareholder Services and Glass Lewis.

Cortica says its technology enables self-driving cars to identify moving parts in its environment and make informed decisions, even predicting changes likely to occur in its surroundings.

Musk won't get the full value in one lump sum, and he might not even get all of it.

California State Teachers' Retirement System (CalSTRS), one of the nation's largest public pension plans, is the 59th largest investor in the auto maker, with a 0.13 percent stake.

Musk and his brother Kimbal recused themselves from the vote. If Musk is successful, Tesla's investors might feel the effects of both.

California state teachers' pension fund CalSTRS told AFP that it voted all of its 258,084 shares of Tesla against the Musk compensation package.

Shares in the company rose 3.42 per cent to $321.18 following the news.

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