Tesla shareholders to decide fate of Musk's $1T pay package

Core Viewpoint - The approval of Elon Musk's proposed $1 trillion pay package is crucial for Tesla, as it may determine his continued leadership and influence within the company [1][3]. Compensation Plan Details - The proposed pay plan, introduced in September, would grant Musk up to 12% of Tesla's stock, potentially worth $1 trillion if the company's market capitalization reaches $8.5 trillion and other operational milestones are met over a 10-year period [2]. - Tesla's current market valuation stands at approximately $1.45 trillion, with Musk owning about 13% of the outstanding shares [2]. Legal Context - The new compensation plan was introduced due to legal uncertainties surrounding Musk's previous $56 billion pay package from 2018, which was voided by a Delaware judge in January 2024 and is still under litigation [3]. Board's Warning - Tesla's board chair, Robyn Denholm, cautioned shareholders that failing to approve the pay package could result in Musk pursuing other ventures, which may lead to a loss of his leadership and vision for Tesla [3][6]. Shareholder Sentiment - Musk has actively urged shareholders to support the pay package, emphasizing the need for sufficient voting control while maintaining accountability [7]. - However, not all shareholders are in favor; Norway's sovereign wealth fund, Tesla's sixth-largest external investor, announced its intention to vote against the plan due to concerns over its size and potential dilution [10]. - Proxy advisory firms Glass Lewis and ISS have also recommended that shareholders reject the compensation package [11]. Historical Context - In the previous year, Tesla shareholders voted on reinstating Musk's $56 billion pay package from 2018, with approximately 77% in favor, although the package was valued at about $44 billion at that time due to stock price declines [12].