What do you give to a man who can already buy anything? How about 1 dollars billion?
This is what Tesla’s board of directors decided to offer CEO Elon Musk. They unveiled a new remuneration package on Friday so that shareholders to consider who could give Musk up to 423.7 million additional Tesla shares over the next decade.
These potential actions could “only” be worth $ 148.7 billion at Friday closing prices. But if Tesla’s actions appreciate as much as the forecasts for the pay package, they were worth almost 1 dollars once Tesla has crossed certain milestones: it only obtains all these actions if Tesla is worth 8.5 billions of dollars, about eight times that it is today, and twice as any society on the planet.
The company’s board of directors indicates in his file to shareholders that he must offer Musk a historic remuneration package or may lose the leader who has become synonymous – for better or for worse – with the Tesla brand.
The Council said that during negotiations on the remuneration package, “Musk also raised the possibility that he could pursue other interests which could allow him a greater influence if he did not receive such insurance.”
The Council said that it “thinks that Mr. Musk has singularly owns the leadership characteristics necessary to transform Tesla and carry out its long -term mission to an unprecedented level”.
But it is also clear that the company was not delighted that Musk considered its Tesla concert as a part -time job. He concentrated a large part of his attention on some of his other private companies, such a SpaceX rocket company and his satellite internet offering Starlink and his artificial intelligence company XAI, which now has its X platform, formerly known as Twitter, which Musk bought for $ 44 billion in his own money in 2022. And Musk became more involved in politics, including Plans to start a third party.
Earlier this year, when Musk still headed the government’s Ministry of Efficiency, or Doge, the board of directors began a search for a possible musk successor, according to the Wall Street Journal. Chairman of the Board of Directors Robyn Denholm and Musk denied the report. Shortly after the start of the reported research, Musk announced that he would leave Doge to spend most of his time directing Tesla.
“The simple message that the board of directors sends to Elon:” We want your attention to Tesla “”, wrote Gene Munster, managing managing part of Deepwater Asset Management in a note on Friday. “Implicit in this message is the promise he will have control that he has sought (a 25%participation) and that it will be worth it.”
Musc asks for control
Musk clearly gave control that Tesla is of vital importance for him. He declared in an article on X in January 2024 that he had to control at least 25% of Tesla shares.
“I am uncomfortable to develop Tesla to be a leader in AI and robotics without having around 25% control of the vote. Publish. “Unless this is the case, I would prefer to build products outside of Tesla.”
This need for control is what is behind this remuneration package, said Ross Gerber, CEO of Gerber Kawasaki, an investment company and one of Tesla’s first investors.
“It is Musk who is afraid of being expelled from Tesla because he holds only 13%,” said Gerber, who sold almost all his participation in Tesla.
Munster and other Tesla bulls believe that he is right to say that AI, autonomous vehicles, robotaxis and humanoid robots are the future that will increase Tesla at the target price of $ 8.5 billion, and adjusted the adjusted operating profits of $ 400 billion which would be 20 times higher than Tesla.
“We are still only scraping the surface of the physical AI: current cases of use are almost comical, limited to the robotaxi tests emerging by Waymo and Tesla,” wrote Munster on Friday. “Finally, physical AI will have an impact on everything that moves, representing a market potential difficult to understand for me.”
But the criticisms of Musk and Tesla predict that Musk will not deliver this potential, just as it has failed to respect many previous target dates for the company to produce vehicles and autonomous Robotaxis. They say that the true value of Musk for Tesla is his ability to convince Wall Street of the brilliant future that awaits us, despite a trace of broken promises.
“Elon Musk said since 2014” we will have a fully autonomous car next year. “It did not happen, but this promise was evaluated in the billions of Wall Street,” said analyst Gordon Johnson, one of Tesla’s hardest criticism. “Elon Musk is a manipulative master. He was able to keep the stock high. The reason why the board of directors pays is that it is ready to say things with which the other CEOs are not willing to say or get away with it. ”
Despite these history, there is a good chance that Tesla investors will approve the potentially massive salary package. They have regularly approved its compensation packages in the past, even strengthening a compensation pack in 2024 that a Delaware judge had thrown as unjust to shareholders and society.
They will see that Musk will get nothing of this new package unless the company and their own assets considerably increase the value. The first target that Musk and Tesla will have to reach before seeing any actions will be 2 billions of dollars, almost double its current value.
“They will think” I have nothing to lose, “said GERBER. He said that their reflection would be in the sense of: “The objectives are so high that if he does them, I will do a lot of money. So who cares if he gets 1 billion of dollars.”
“But if you think about it, it’s absurd,” he said.
