It was the last step that separated Elon Musk from getting the biggest salary bonus in history US business. Tesla’s shareholder meeting has given majority support to its CEO who, if achieved, would become the world’s first billionaire. “Other shareholder meetings are boring, but ours are amazing,” said an exultant Musk on stage in front of some of his shareholders.
Tesla’s plan, valued at nearly a trillion dollars, is based on the progressive unlocking of payments in the form of packages of shares and is conditional on Musk meeting a series of very ambitious objectives related to the company’s growth and technological development over the next decade, giving Musk tight control over the decisions the company makes.
Approved and with grade. With the support of 75% of shareholders, Tesla has approved a plan that could give Elon Musk up to 423.7 million shares in the company over the next ten years. The estimated valuation of these shares exceeds one trillion dollars, a figure that, although extremely high, strictly depends on certain very specific and demanding objectives being met.
It should be said that it has not been a simple negotiation, since Musk has faced important shareholders such as the Norwegian sovereign wealth fundwhich controls a stake of 11.7 billion, spoke out against of the Tesla CEO’s compensation plans clarifying that “while we appreciate the significant value created under Mr. Musk’s visionary role, we are concerned about the overall size of the award.”
As a counterpoint, Musk controls approximately 15% of Tesla’s shares and, like any other shareholder, could also vote in favor of his compensation plan. “What we are about to embark on is not simply a new chapter in Tesla’s future, but an entirely new book,” Musk told a packed audience of shareholders during the act of voting.
1 billion, but with conditions. To receive the total remuneration, Elon Musk must meet different progressive milestones that will unlock 12 packages of shares that can only be made effective after seven years, which not only guarantees to keep Musk motivated with financial incentives, but are also golden handcuffs to keep him as CEO of the company for the next decade.
The package of shares will provide Musk with control of 25% of Tesla’s shares, which implies that this package of shares is not only about economic compensation (very generous, yes), but it is about gaining more weight in the company and allowing Musk to impose his criteria in front of the board of directors. Something that I had been demanding for a long time to prevent they made him “an Altman.”
Complicated milestones. Milestones Musk must reach to receive the full package include: raising the Tesla market capitalization from the current 1.5 trillion to 8.5 trillion dollars. This first condition is one of those that has most convinced the popular investor Cathie Wood, who wrote from her
In addition, Tesla must manufacture and deliver 20 million vehicles, just at a time when Tesla sales in Europe and other markets record their worst figures. To put it in context, Tesla sold 55 units of its Model 3 in Spain during the month of October. It’s not going to be easy.
Freelance future. Another of the great challenges that Musk will face to get his billion-dollar bonus, and one of the main reasons why Musk wanted more control within Tesla, are the future plans for the company’s autonomous car and humanoid robots.
To unlock part of its salary package, Tesla must deploy one million autonomous taxis, reach ten million subscriptions to its self-driving cars, and sell one million humanoid robots. None of these three projects is 100% functional at present and there are only prototypes and partial tests. “I think it’s going to be the biggest product of all time, by far. Bigger than cell phones, bigger than anything. I guess one way to think about it is that every human being on Earth is going to want to have their own R2D2 or C3PO,” assured the CEO of Tesla in his speech to his shareholders.
Perhaps the least commented detail is that, with this approval, Tesla gives the green light to the investments in xAIso Musk would have already achieved one of his objectives: obtain a constant line of financing that increases the value of your AI company.
If you don’t get it you don’t get paid. The compensation plan does not contemplate a traditional fixed salary for Elon Musk for the next decade. All your compensation will be linked to the achievement of the set objectives.
In addition, Musk would have to remain CEO for at least ten years to collect the package in full. This part has been one of the most talked about, since it gives Musk an almost messianic role at the head of Tesla in which he either takes the entire prize or leads Tesla to absolute failure. “This is not pay for performance. It is pay for power without control,” said to The New York Times Thomas DiNapoli, head of the New York public pension fund, which controls part of Tesla’s shares.
It should be remembered that, currently, Musk receives a symbolic salary of a dollar a year for running the company.
Image | Flickr (Gage Skidmore)
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