Elon Musk's $1 Trillion Pay Plan: The Case For Magical Thinking

Core Viewpoint - Tesla CEO Elon Musk is seeking a $1 trillion compensation package, which is facing significant opposition from shareholders and analysts, despite the company's high stock valuation and potential future growth in AI and robotics [2][3][10]. Company Performance - Tesla's stock is trading at over 300 times projected earnings, with shares rising 4% to $462.26 recently [3]. - The company reported a 7.4% increase in third-quarter EV sales, attributed to the expiration of a federal tax credit, but overall sales are down about 6% for the year and expected to decline further in 2025 [6][10]. Market Challenges - Tesla is experiencing declining sales in key markets such as the U.S. and China, facing competition from local manufacturers like BYD and Xiaomi [6]. - Musk's political affiliations and public statements have negatively impacted Tesla's brand appeal, particularly in California, the largest EV market in the U.S. [6]. Compensation Proposal - The proposed compensation plan would grant Musk an additional 12% stake in Tesla, contingent on achieving ambitious goals, including selling 20 million EVs by 2035 and having a market cap of $8.5 trillion [10]. - The plan has faced pushback from various stakeholders, including Norway's sovereign wealth fund and proxy advisory firms, with concerns about Musk's focus and accountability [9][10]. Investor Sentiment - Some investors express dissatisfaction with Musk's leadership direction, feeling that the company's focus has shifted away from sustainable transportation towards less impactful ventures like robotaxis [7][9]. - Despite the opposition, some analysts believe Musk will receive overwhelming shareholder approval for the compensation package, citing historical trends of support for his proposals [13][14].