Musk could become first trillionaire as Tesla pay approved

Contents of the article

NEW YORK – The world's richest man just got a chance to become history's first trillionaire.

Contents of the article

Elon Musk won a shareholder vote Thursday that would make the Tesla CEO's stock worth $1 trillion if he hits certain goals over the next decade. The vote followed weeks of debate over his management record at the electric vehicle maker and whether anyone deserved such an unprecedented salary, sparking heated comments from small investors to giant pension funds and even the Pope.

Contents of the article

Contents of the article

In the end, more than 75% of voters approved the plan when shareholders gathered in Austin, Texas, for their annual meeting.

“A fantastic group of shareholders,” Musk said after the final vote was tallied, adding: “Hold on to your Tesla shares.”

The vote is a resounding victory for Musk, showing investors still have faith in him as Tesla struggles with falling sales, market share and profits, due in no small part to Musk himself. Car buyers left the company this year as he entered politics in both the US and Europe and spread conspiracy theories.

Contents of the article

Contents of the article

The vote came just three days after a report from Europe showed Tesla car sales fell again last month, including a 50% collapse in Germany.

Still, many Tesla investors view Musk as something of a miracle man, capable of stunning business feats, such as when he brought Tesla back from the brink of bankruptcy a half-dozen years ago and turned it into one of the most valuable companies in the world.

The vote clears the way for Musk to become a trillionaire by giving him new shares, but it won't be easy. The board that developed the remuneration package requires him to achieve several ambitious financial and operational goals, including increasing the company's stock market value to nearly six times its current level.

Musk will also have to deliver 20 million Tesla electric vehicles to market within 10 years amid fierce new competition, more than doubling the number since the company was founded. He also has to deploy 1 million of his humanoid robots, which he has promised will transform work and home – he calls it a “robot army” – from the ground up today.

Contents of the article

Musk could add billions to his wealth over the course of a few years, partially achieving those goals, according to the various intermediate steps that his newly created shares in the company would give him as he gets closer to his final goals.

This could help him eventually surpass John D. Rockefeller, who is now considered America's richest man ever. The oil giant was worth $630 billion at current prices at the height of its wealth more than 110 years ago, according to Guinness World Records. According to Forbes magazine, Musk's net worth is $493 billion.

Musk's victory came despite opposition from several major funds, including CalPERS, the largest U.S. public pension fund, and Norway's sovereign wealth fund. Two corporate watchdogs, Institutional Shareholder Services and Glass Lewis, also criticized the package, angering Musk so much that he began calling them “corporate terrorists” at a recent meeting with investors.

Contents of the article

Critics argued that the board was too beholden to Musk, his recent behavior was too reckless and his wealth offered too much.

“He already has hundreds of billions of dollars in the company, and to say he won't be without a trillion is ridiculous,” said Sam Abuelsamid, an analyst at research firm Telemetry who has covered Tesla for nearly two decades. “It’s absurd that shareholders think he’s worth that much.”

Backers said Musk should be keen to focus on the company as he works to transform it into an AI powerhouse, using software to control hundreds of thousands of self-driving Tesla cars (many without steering wheels) and Tesla robots deployed in offices, factories and homes, performing many of the tasks now done by humans.

Contents of the article

“This artificial intelligence division needs one person to lead it, and that's Musk,” said financial analyst Dan Ives of Wedbush Securities. “This is a huge win for shareholders.”

Investors voting on pay had to consider not only Musk's promise of a bold new tomorrow, but also whether he could disrupt the situation today: He threatened to quit the company, which investors feared would send the stock crashing.

Tesla shares, already up 80% in the past year, rose on news of the vote in after-hours trading but then remained little changed at $445.44.

For his part, Musk says the vote wasn't really about money, but about getting a higher share of Tesla – it would double to almost 30% – so he could have more power over the company. He said this was a pressing issue given Tesla's future “robot army”, and he suggested that no one else should be trusted to control it given the possible danger to humanity.

Other issues up for votes at the annual meeting also gave Musk a victory.

Shareholders approved allowing Tesla to invest in one of Musk's other businesses, xAI. They also rejected a proposal to make it easier for shareholders to sue the company by reducing the size of ownership required to sue. The current rule requires at least 3% equity.

Contents of the article