is transportation editor with 10+ years of experience who covers EVs, public transportation, and aviation. His work has appeared in The New York Daily News and City & State.
Posts from this author will be added to your daily email digest and your homepage feed.
On Thursday, Tesla shareholders will vote on whether to grant Elon Musk an enormous pay package, the largest ever awarded to a chief executive by orders of magnitude, or risk him leaving the company in a huff.
If this sounds weirdly familiar, it’s because the same thing unfolded nearly a year ago. At the 2024 meeting, Tesla shareholders were urged to vote in favor of a $50 billion payday for Musk, in order to keep him on the job as CEO. This time the money is much greater — estimated to be worth $1 trillion — and the stakes for Tesla are much higher.
The proposal, put forward by Tesla’s board in September, says that Musk must “completely transform Tesla and society as we know it” by delivering millions of humanoid robots and self-driving cars in order to earn the compensation. Conversely, Musk would get “zero” unless he meets these “incredibly ambitious” goals.
The trillion dollar question
Under the proposed pay package, Musk would need to meet certain milestones, such as producing 1 million robotaxis and 1 million humanoid robots, as well as increase Tesla’s valuation by trillions of dollars. Each milestone unlocks tens of billions of dollars in compensation for Musk. It would increase his stake over a decade from about 15 percent to around 25 percent.
But Tesla’s claims that Musk will get nothing if he fails to hit these benchmarks isn’t exactly true. He could collect $50 billion — the original proposal from last year that was struck down by a Delaware judge — even while missing most of the targets set out in the proposal. Even hitting just two of the easiest targets, along with modest stock growth, would net Musk $26 billion, according to Reuters.
“That means he gets one-seventh of the value that he would create, something like 12 to 13 percent,” said Gregory Shill, law professor and corporate governance expert at Arizona State University. “That’s very high for an executive comp package. A typical public company CEO would usually get low single digit percentage point incentive package… I would say this looks more like the type of incentive package you would give managers at a portfolio company owned by a private equity firm.”
The vehicle sales milestone, for example, seems like an easy layup. If Tesla sells 1.2 million cars a year over the next decade, on average, Musk earns $8.2 billion in stock — as long as Tesla’s market value grows from $1.4 trillion today to $2 trillion in 2035. That’s a half-million fewer cars per year than Tesla sold in 2024. And other product goals are written in such vague language that Musk could still see enormous payouts without significantly boosting profit, Reuters says.
... continue reading