New Delhi. About 75% of Tesla shareholders approved a huge pay package prepared for Elon Musk. The Tesla board has created a performance-based incentive structure in which if the company achieves certain financial targets, Musk will receive shares worth billions of dollars. With this bonus package, Musk’s personal wealth may cross 1 trillion dollars. This is the most expensive package received by a CEO in the history of any company. The money Musk will receive will be more than the GDP of prosperous countries like Singapore, UAE, Switzerland, Sweden, Norway, Hong Kong, Qatar and New Zealand.
The main objective of this package is to keep Elon Musk connected to Tesla for a long time. Recently, Elon Musk had warned that if Tesla investors do not pass his pay package proposal, he will leave the company. Board members also described Elon Musk as very important for Tesla because the company is working on big projects in areas like AI, robotics and autonomous technology. The board does not want Musk to divert his attention from these projects or think about leaving the company.
What’s included in the package?
This pay package is divided into 12 parts. Each part will be unlocked only when Tesla meets specific financial and operational targets set for the next ten years. If all targets are achieved, Musk will receive more than 423 million shares, increasing his stake in the company from 13% to 25%. This means that Musk will gain more control over Tesla than before.
According to the market value, if Tesla reaches the market cap of $ 8.5 trillion, then the value of these shares can be around $ 1 trillion. This means that in the next ten years, Musk can get a profit equal to about $ 275 million per day. After voting on the pay package ended, Musk thanked shareholders, saying, “I appreciate it very much.”
Why did shareholders support?
Although some proxy advisory companies advised to vote against it, calling it too much, most shareholders agreed that Musk’s leadership is very important in Tesla’s future plans. According to reports, the company’s board also felt that if this package was not passed, Musk could consider leaving the company. This would have been a very risky move for Tesla.
What will be the effect?
Musk’s grip on Tesla will become stronger, due to which the company’s strategy and direction will move forward according to his vision. Shareholders are hoping that by taking big steps in AI, robotics and self-driving technology, Tesla can become one of the world’s most valuable companies in the coming years. On the other hand, critics say that such a huge salary package raises questions on corporate governance.
