Is Elon Musk worth $1 trillion?
According to shareholders of Tesla, the answer is a resounding yes.
The billionaire, already the world's richest man by some estimates, had a pay package approved on Friday (AEST) that could give him as much as US$1 trillion ($1.54 trillion) over the next decade. Required payments, though, would take the value down to US$878 billion ($1.35 trillion).
While there were some objectors to the package, the board argued the company could lose Musk and his vision without such a hefty remuneration.
In the lead up to the vote, Tesla chair Robyn Denholm argued that the package was needed to stop Musk from investing more time on other pursuits. In addition to Tesla, Musk is the CEO and chief engineer of aersopace company SpaceX, has a range of other businesses, including in AI, and was a former adviser to the Trump administration.
"If we fail to foster an environment that motivates Elon to achieve great things through an equitable pay-for-performance plan, we run the risk that he gives up his executive position, and Tesla may lose his time, talent and vision, which have been essential to delivering extraordinary shareholder returns," Denholm wrote in a letter to Tesla shareholders in late October.
Who objected to the pay increase?
The California Public Employees' Retirement System, the largest public pension fund in the United States, said it went against its policy of evaluating executive pay against performance and industry norms.
"It would also further concentrate power in a single shareholder," Drew Hambly, the fund's global public equity investment director, said.
Norway's sovereign wealth fund also said it objected to the size of the compensation, among other issues.
"While we appreciate the significant value created under Mr Musk's visionary role, we are concerned about the total size of the award, dilution, and lack of mitigation of key person risk — consistent with our views on executive compensation," the Norges Bank Investment Management said in a statement.
Musk 'worth' the $1 trillion pay packet
There are a few hurdles Musk needs to clear in order to cash in on the deal.
He has to increase Tesla's stock price to US$8.5 trillion ($13.1 trillion) from the current US$2.3 trillion ($3.5 trillion) and oversee the rollout of 20 million vehicles — including one million robotaxis on roads — and one million robots.
"You're going to have to see extreme growth in the share price of and in the market cap of Tesla but that is just one of the hurdles he would need to hit in order to get this pay packet," US-based markets analyst Thomas Essaye told ABC News Radio.
"He will have to hit many aggressive goal posts to get the pay package."
Essaye said he believed Musk was worth the trillion due to his transformative vision, comparing him to a modern-day version of legendary US inventor Thomas Edison.
"(Elon Musk) is truly a visionary. He isn't creating existing technology and making it better, he's creating it out of thin air," Essaye said.
"And he is the face of the company, so I think that does warrant some special consideration."
Musk told the shareholder meeting the company was about to embark on a "whole new book" in the history of Tesla.
He then made a string of promises on stage — from, in April, beginning production of the Cybercab, its two-seater steering-less robotaxi, to unveiling its next-generation Roadster electric sports car. He also said Tesla would need "a gigantic chip fab" [fabrication plant] to make AI chips and should consider working with manufacturer Intel.
— With additional reporting by the Reuters news agency.
Share
