Elon Musk Moves Closer to Becoming First Trillionaire with Pay Approval

Elon Musk has taken a significant step towards potentially becoming the world’s first trillionaire. On November 7, 2023, Tesla shareholders voted overwhelmingly in favor of a compensation package that could grant Musk stock valued at approximately $1 trillion (£760 billion) if he achieves specific performance goals over the next decade. This decision followed extensive discussions about Musk’s management style and the ethics of such a high compensation structure, engaging opinions from small investors to major pension funds.

The shareholder meeting took place in Austin, Texas, where more than 75 percent of voters supported the plan. Musk expressed his gratitude, stating, “Fantastic group of shareholders,” and encouraged them to “Hang on to your Tesla stock.” This approval reflects investor confidence in Musk, despite Tesla facing challenges, including declining sales and market share.

The past year has not been kind to Tesla, with recent reports indicating a sharp decline in car sales, particularly a staggering 50 percent drop in Germany. Critics have pointed to Musk’s political engagements and controversial statements as factors driving customers away. Nevertheless, his supporters view Musk as a transformative figure, recalling his pivotal role in steering Tesla from near bankruptcy to one of the world’s most valuable companies.

Ambitious Targets Set for Musk

The approved pay package lays out several ambitious targets Musk must meet to unlock the potential trillion-dollar stock award. This includes increasing Tesla’s market value nearly sixfold and delivering 20 million electric vehicles over the next decade, a significant leap compared to the cumulative total since the company’s inception. Furthermore, Musk aims to deploy one million humanoid robots, which he refers to as a “robot army,” to revolutionize various industries.

Should Musk partially achieve these goals, they could significantly enhance his wealth in the coming years. The ultimate target would position him to surpass the historical fortune of John D. Rockefeller, who was estimated to be worth $630 billion in today’s dollars at his peak. Currently, Forbes estimates Musk’s net worth at approximately $493 billion.

Despite the vote’s outcome, it faced opposition from several prominent investors, including CalPERS, the largest public pension fund in the United States, and Norway’s sovereign wealth fund. Two corporate governance advisory firms, Institutional Shareholder Services and Glass Lewis, criticized the pay package, arguing that it incentivizes reckless behavior and disproportionately favors Musk. In response to criticism, Musk referred to these watchdogs as “corporate terrorists” during a recent investor gathering.

Supporters and Critics Weigh In

Supporters argue that Musk needs this compensation structure to maintain focus on Tesla’s transformation into a leader in artificial intelligence and autonomous driving technology. Financial analyst Dan Ives from Wedbush Securities stated, “This AI chapter needs one person to lead it and that’s Musk,” emphasizing that this move is a significant win for shareholders.

Meanwhile, critics like Sam Abuelsamid, an analyst at Telemetry, expressed concerns over the justification for such a vast compensation package. “He has hundreds of billions of dollars already in the company, and to say that he won’t stay without a trillion is ridiculous,” he remarked, questioning the rationale behind the package.

As Tesla navigates a competitive landscape filled with new entrants in the electric vehicle sector, Musk’s path to achieving these ambitious targets and securing his place in history remains uncertain. The outcome of this vote signals a pivotal moment for both Musk and Tesla, as they face the challenges and opportunities that lie ahead.