Tesla shareholders have approved Elon Musk's massive new pay package

Jeannie Matthews
March 22, 2018

But which way do shareholders hope the vote goes?

The unprecedented package grants Musk stock awards in 12 increments tied to the electric-car maker's performance over the next 10 years.

USA electric vehicle company Tesla Inc said on Tuesday that Chief Executive Elon Musk, who was visiting Israel, did not discuss a collaboration with artificial intelligence firm Cortica.

If the firm's market value rises to $650 billion over the next 10 years, Musk could ultimately be awarded over $55 billion in stock options.

It could net Musk more than $50 billion if he meets 12 milestones including increasing the company's market capitalization tenfold to $650 billion.

California State Teachers' Retirement System, the second-largest pension fund in the US, said it did not support the plan, citing concerns about potential dilution and an absence of profitability goals.

"We have concerns about the lack of focus on profitability for the company, and the one profitability metric that is used excludes the cost of stock-based compensation", CalSTRS' Director of Corporate Governance, Anne Sheehan, said in a statement.

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Tesla stressed that Musk will "receive no guaranteed compensation of any kind - no salary, no cash bonuses, and no equity that vests simply by the passage of time". This, in theory, means that Tesla's CEO will have to put his money where his mouth is.

Elon and Errol Musk are both brilliant engineers in their own right, however it seems as if they need to work on repairing their relationship for the good of their family. The plan also doesn't offer any indication as to when Tesla will have its first-ever profitable fiscal year. Meanwhile, the company has faced continued setbacks on its more affordable Model 3.

Tesla was valued at about $52.46 billion at Tuesday's closing price, according to Thomson Reuters data.

Musk is also the CEO of Space Exploration Technologies Corp. and has embarked on several other projects of late, including tunnel digger Boring Co. and a brain-computer interface startup called Neuralink.

Ahead of the vote, a top investor in Tesla Inc and a major proxy adviser offered opposing views on whether to support the compensation arrangement, which required majority approval from shareholders. It's pegged on ambitions to turn Tesla into one of the world's largest companies as it ventures beyond solar panels and electric cars. Some are already reaching 265 miles on a single charge.

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