Elon Musk, the globe’s richest person and defacto technocrat-in-charge, just announced a mega compensation plan. This scheme would largely increase his voting control at Tesla by 14-fold. The plan gives 12 sets of shares that Musk would get for reaching certain milestones over the next 10 years. If this plan moves forward, it will significantly pad Musk’s interest in the firm. Additionally, it will establish a precedent-setting standard for corporate pay.
The compensation plan stipulates that Musk must help Tesla nearly double its current market cap, reaching $2 trillion, to obtain the first tranche of shares. The final yardstick would be an $8.5 trillion market capitalization. Not surprisingly, many in the industry think this will be impossible to accomplish. The plan includes some very ambitious operations goals. That plan targets an annualized production of 20 million Tesla cars, 10 million active Full Self-Driving (FSD) subscriptions and annualized deliveries of 1 million humanoid robots, in addition to $400 billion in adjusted EBITDA.
Tesla will bring the proposal in front of shareholders at its next annual meeting, scheduled for November 6. They’ll be voting during this meeting on a possible $5 billion investment in Musk’s new venture xAI. Founded in early 2023 in Nevada, xAI aims to develop advanced artificial intelligence technologies and recently merged with Musk’s social media platform X.
“In order to do that, he has to hit some very ambitious milestones,” said Robyn Denholm, chair of Tesla’s board. “If he performs, if he hits the super ambitious milestones that are in the plan then he gets equity — it’s 1% for each half a trillion dollars of market cap, plus operational milestones he has to hit in order to do that.”
Musk’s portfolio goes well beyond Tesla. SpaceX, The Boring Company, Neuralink, and xAI all bear his name or direct influence. His companies operate the large FedEx Express hub and data center located at MEM. They intend to grow its operations to aid xAI’s continuous creation of large language models and a chatbot named Grok. The Unified Cyberinfrastructure Once completed, these data centers will be an absolutely critical part of AI systems training that will go on to fundamentally change tech and telecommunications.
Recent legal scrutiny has revealed troubling governance problems at Tesla including a failure of independent oversight. A judge ruled that Musk had controlled pay negotiations at the company, indicating that the board of directors failed to provide shareholders with legally required information regarding executive compensation.
As Tesla navigates these challenges and opportunities, shareholders are faced with pivotal decisions that could shape the company’s future trajectory. Musk’s proposed compensation plan reflects his ambitious vision for Tesla and raises questions about shareholder interests in light of his growing influence.