Tesla’s shareholders meeting is preparing to vote this Thursday on whether to make its founder, Elon Musk, its first billionaire, giving him a target-based salary of nearly a billion – with b – dollars, the equivalent of 867.5 billion euros at the current exchange rate. To get an idea of the scale, if Tesla succeeds in carrying out the plan, Musk will charge for one year an amount equivalent to half of the wealth generated by Spain (GDP).
Investors will vote on more than a dozen proposals, but the most surprising is the giant compensation plan for Musk, who is already the richest person in the world with an estimated net worth of $473 billion. If the plan finally came to fruition, it would mean multiplying the manager’s current salary by 17 thousand times, who receives around 59 million a year. Furthermore, it would usher in a new era of wages, widening the gap between managers and workers and exacerbating inequality.
In recent weeks the company has launched an unprecedented campaign to try to convince shareholders to vote in favor of the proposal. They argue that Musk is essential to leading the company’s transformation from an electric car maker to a leading technology company with a commitment to robots, drones and autonomous cars by promoting artificial intelligence (AI).
“We believe that Tesla is on the brink of another wave of unprecedented transformative growth,” the group notes in its voting presentation to its shareholders. “Tesla’s next chapter has the potential to create a world we have only begun to imagine: reinventing work, transportation and energy, and integrating artificial intelligence into the physical world through products and services to create a safer, cleaner and more pleasant world for all,” he adds as if promising a new world described in Isaac Asimov’s novels.
The proposal consists of giving Musk 1% of the company’s shares over the next 12 years in exchange for achieving goals such as reaching a stock market value of $8.5 trillion, which means multiplying the current capitalization by six. It also has commercial objectives: that 20 million Teslas are sold in the period, that a gross operating profit of 50,000 million is achieved and that one million robots and another million autonomous cars are launched.
“Tesla will become the most valuable company in history and shareholders will benefit from unprecedented growth and value creation,” insists the technology group to its investors.
The board of directors of the company, controlled by Musk, stresses that the unprecedented remuneration plan is essential to ensure the South African’s continued leadership of the company at a stage that represents a “critical turning point” due to the impact of artificial intelligence.
Musk’s influence on the company is enormous. But the billion-dollar compensation plan has met with some pushback from shareholders. The proposal allows the board of directors some freedom in deciding compliance with certain deadlines. Some critics disagree because they believe the goals are more recommendations than actual goals.
Norway’s sovereign wealth fund, one of the largest in the world and a major investor in Tesla, announced last Tuesday that it will oppose Elon Musk’s compensation plan. The fund holds a 1.16% stake, the sixth largest among institutional investors.
“While we recognize the significant value generated by Musk’s visionary role, we are concerned about the total size of the bonus, the dilution and the failure to mitigate the risk associated with reliance on key people, in line with our position on executive compensation,” said Norges Bank Investment Management, manager of Norway’s government pension fund. “We will continue to seek constructive dialogue with Tesla on this and other issues,” he added.
The vote also takes place at a delicate moment for the company. Car sales are declining. Although the last quarter managed to reverse the situation thanks to the end of aid for the purchase of electric cars by the US federal government. The truth is that profit fell 37% due to declining margins on car sales.
The company also suffers from a decline in its reputation following its CEO’s involvement in politics. The entrepreneur of South African origins actively collaborated in Donald Trump’s government. Between January and May, Musk was in charge of the federal budget cuts office, known as DOGE, and which was responsible for thousands of layoffs and reductions in government spending, which caused Democratic citizens to turn their backs on their companies.
Since he became involved in politics, social movements have emerged against Tesla and social network X, a company he runs, which has influenced his business. However, investors don’t seem to think the same way, because after a start to the year full of dark clouds, with accumulated drops of up to 30%, Tesla shares have already appreciated by 20% this year.
