When the result was announced, the… TeslaAnnual General Meeting in Austin was louder cheers out.
Many of the attendees stood for a standing ovation. For Tesla CEO Elon Musk (54), it was a resounding victory when shareholders approved a compensation package of up to $878 billion (€871 billion) over the next ten years on Thursday. And in doing so, they supported his vision of transforming the electric car manufacturer into an AI and robotics giant. The proposal was approved with more than 75 percent support.
And Musk, who entered the stage with dancing robots amid shouts of “Elon,” then gave the shareholders in attendance what they were thirsting for: a completely new story, the story of the leading AI company. He raved about production lines in which hundreds of millions of robots would be built for the benefit of all humanity. Talked about the “greatest product of all time”, “bigger than the cell phone”. And about how the robot Optimus will abolish poverty. Of course, only he can control this “robot army”. Otherwise he wouldn’t be comfortable with the idea.
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A general meeting as a happening
And he created a good atmosphere by dancing at times: “Other general meetings are total snorefests, but ours are awesome,” he announced. “I mean, look at this. This is crazy.”
For Elon Musk, for whom the board of directors and apparently he himself had discussed a possible departure from Tesla in the event of the compensation program being rejected, it is a victory across the board. The success also caused Tesla’s share price to rise in after-hours trading.
Musk predicts flying car
The influential shareholder advisors ISS and Glass Lewis had asked investors to reject the proposal for the new compensation package. And also the Norwegian oil fund as the largest Sovereign wealth fund the world had announced to vote against the compensation proposal.
But if Musk were to leave, the car manufacturer’s valuation, which had recently come under pressure at times due to massive sales problems but was still immensely high, would have threatened to collapse. With a price-earnings ratio of well over 200, Tesla is valued many times higher than other car manufacturers.
Now the story, “the whole book,” as Musk put it Thursday, continues. There is no shortage of imagination and full-bodied promises: a few days ago, Musk even demonstrated one in a podcast – possibly before the end of the year flying cars
announced.
Salary package against ambitious goals
However, Musk will only receive the compensation package if he meets a series of goals. For example, Tesla’s market value must break the $8.5 trillion mark in ten years. The electric car pioneer currently has a market capitalization of $1.5 trillion – the 10th most valuable company in the world.
With such an increase in value, the value of the shares Musk already owns would also break the trillion mark, making him the world’s first trillionaire. The 54-year-old is already the richest person in the world with an estimated fortune of more than $470 billion. After all, Musk will receive neither a salary nor a bonus during the ten-year term of the salary package.
In addition, Musk must remain in the executive suite for the next ten years. Other goals include delivering a total of 20 million vehicles with a market value of $2 trillion (so far, Tesla has put 8.5 million cars on the road since its founding), operating one million robotaxis and selling one million Optimus robots.
An even bigger hurdle later could be to break the $400 billion per year mark in adjusted earnings before interest, taxes, depreciation and amortization (Ebitda) and stay above it, in addition to a market value of $6.5 trillion. With a market value of $4 trillion, the initial target is an adjusted Ebitda of $50 billion.
If Musk achieves each of the ambitious goals, his stake in Tesla would increase to around 25 percent.
Positive signal for Tesla shares
Shareholders also re-elected three directors to Tesla’s board and voted for a replacement compensation plan for Musk’s services, as a legal challenge blocked an earlier package. Shareholders also voted in favor of a proposal that would require the board to hold annual elections for all members.
Analysts say the vote is a positive signal for Tesla shares, whose valuation depends on Musk’s vision of making cars drive autonomously, rolling out robotaxis in the US and selling humanoid robots – even if his far-right political rhetoric has hurt the Tesla brand this year.
More on the topic
A victory for Musk had been widely expected as the billionaire was allowed to exercise full voting rights on his roughly 15 percent stake after the automaker moved its headquarters from Delaware to Texas, where a legal challenge had blocked an earlier pay raise.