Shareholders Approve Musk’s Trillion-Dollar Payday

Bedazzled shareholders approved Tesla CEO Elon Musk’s proposed $1 trillion pay package. But to collect he faces major challenges. Musk has to turn around Tesla’s faltering automotive business at a time when EV sales are sagging, while also proving his vision of robotaxis, robots and AI can add new sources of revenue for the Texas-based company. More from Headlight.News.

Tesla shareholders voted by a roughly three-to-one margin to approve a controversial $1 trillion compensation package for CEO Elon Musk.

Despite some opposition from major pension funds in both the U.S. and Europe, the unprecedented pay package proposed by the Tesla board of directors passed with overwhelming 75% support – triggering cheers of “Elon! Elon!” from shareholders gathered for Tesla’s annual meeting at its factory in Austin, Texas.

For his part, Musk was flanked by dancing Optimus robots as he declared, “What we’re about to embark upon is not merely a new chapter of the future of Tesla, but a whole new book.”

Fanboys

The proposal did face some shareholder opposition, notably from Norway’s massive Sovereign Wealth Fund, which was instrumental in the company’s growth, and CALPERS, the California public employees retirement fund

The lopsided pro vote positioned shareholders alongside the legion of fanboys who have hailed Musk as a once-in-a-century business genius on the order of Henry Ford and Thomas Edison, and destined to lead the company to even greater heights in the years to come.

The Tesla board has tried on several occasions to roll out record pay packages for the South African-born entrepreneur, but two previous proposals were blocked by a court in Delaware. Tesla last year shifted its corporate registration from that state to Texas which has less of a history of challenging corporate decisions. It also made changes that restrict the ability of small shareholders to bring lawsuits against the company.

Musk must meet big goals to collect

Despite the potential payout, there’s no guarantee Musk will receive the first-ever $1 trillion executive pay package – or even some of it.

To get the big payday, the Tesla CEO has to deliver some significant gains in both Tesla’s traditional business lines as well as new sources of revenue. Overall, he will be required to significantly expand Tesla’s market value, revive the car business and build out the company’s robotaxi, robotics and AI ventures.

By voting in favor of the pay package, Tesla shareholders have not only given a vote to Musk, but assured the visionary CEO remains at the company. CEO Robyn Denholm had warned them the CEO might leave if his pay package were rejected – and Musk himself had indicated he might take with him some key assets, including AI technology.

But meeting all the expectations built into the pay plan could be a challenge – ironically, in the case of increased EV sales, because of a fallout between Musk and his former ally, Pres. Donald Trump. The Trump administration has sidetracked plans by the previous Trump White House to expand the EV market in the U.S. Tesla sales also have taken a hit due to public opposition to his early role as head of Trump’s Department of Homeland Security. His political shift to the far right also has come at a high cost in terms of lost business for Musk’s X platform, formerly Twitter.

More Tesla News

• Musk’s $1 Trillion Pay Deal Goes to Shareholders
• Tesla Earnings Take 40% Q3 Hit
• Tesla Rolls Out 1st Robotaxis, Announced $4.20 Ride Fee

Road to Musk’s big payday may run through China

Critics contend Musk has shown a loss of interest in the automotive business, which so captivated him ten years ago. Whether or not that’s accurate, the EV segment not only faces lower demand in the U.S. but growing competition from rising Chinese competitors such as BYD, which have demonstrated a knack for producing new models quickly and efficiently

The Chinese market accounts for nearly half of Tesla’s sales and production, but Chinese consumers are less impressed with the company’s vehicles than they were two or three years ago. Additionally, Musk is heavily dependent on Chinese suppliers.

Tesla’s robotaxi business also faces intense competition from Chinese rivals as well as Alphabet’s Waymo subsidiary and others entering the field, including ride-sharing giant Uber and General Motors. The emerging field is heavily reliant on approval from federal, state and local regulators, who Musk has often failed to win over to this side. A growing number of crashes involving Tesla robotaxis in Austin, its first market, have resulted in new probes into the safety of the automaker’s autonomous technology.

Tesla is meme stock not an industrial company

Tesla transformed into a meme stock years ago dependent on investor vibes and on the Musk mystique, which originally was built on his accomplishment in getting the company up on running as an auto manufacturer. The company also arrived at a time when California regulators were hunting for alternative to the internal combustion engine.

Musk also has helped keep Tesla’s stock afloat by making an endless string of promises, which produce big, but quickly forgotten headlines. Critics have noted that many of those promises have failed to materialize. It hasn’t come close to selling 20 million EVs annually – a figure that would be more than twice the total global volume Toyota expects to reach this year. And after years of saying the technology is on the edge of arriving, Tesla Full Self-Driving system still isn’t.

Despite Musk’s win with shareholders, it’s yet to be seen if he can win back the EV buyers alienated by his political turn. Tesla continues to face protests and boycotts at stores in both the U.S. and Europe.

The longer-term question is whether the new lines of business covered by the Musk pay plan will deliver on his promises. That would require a nationwide rollout of Tesla robocabs, massive acceptance of its Optimus robots – which Musk envisions will land in millions of homes and businesses – and the broad application of its AI technology.