Tesla shareholders just handed Elon Musk an eye-popping pay package

Darnell Taylor
March 22, 2018

Tesla shareholders voted Wednesday to approve a massive $2.6 billion compensation package for CEO Elon Musk despite opposition from two of the company's prominent proxy advisory firms, according to multiple reports. But which way do shareholders hope the vote goes?

"Given the size of the award, we believe the potential dilution to shareholders is just too great".

Speaking at the 8th Negev Conference in Dimona Tuesday, Prime Minister Benjamin Netanyahu said he met earlier with Elon Musk, founder and CEO of electrical and autonomic auto company Tesla Inc. and aerospace company SpaceX, who encouraged development of the Negev.

The firms, Institutional Shareholder Services and Glass Lewis, both peg the current value of Musk's package at $3.7 billion.

In order to receive the highest award, Tesla would have to be worth more than 12 times as much as General Motors, the US's largest vehicle manufacturer, is today ($52.9bn).

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Under the proposed award, which involves stock options that vest in 12 tranches, Tesla's market value must increase to $100 billion for the first tranche to vest and rise in additional $50 billion increments for the remainder.

South African engineer Errol Musk, 72, hasn't spoken to his billionaire son in 18 months after fathering a child with a woman 42 years his junior. "In addition, we have concerns about the lack of focus on profitability for the company, and the one profitability metric that is used excludes the cost of stock-based compensation, ' CalSTRS" Director of Corporate Governance, Anne Sheehan, said in a statement before the vote. This, in theory, means that Tesla's CEO will have to put his money where his mouth is. Tesla has yet to turn a full-year net profit even though it's been in business for 15 years.

Tesla shareholders are set to vote on Musk's compensation plan on Wednesday morning, with a majority approval needed for the proposal to pass. It's pegged on ambitions to turn Tesla into one of the world's largest companies as it ventures beyond solar panels and electric cars.

Though I feel like an acquisition is unlikely simply because the space has seen a ridiculous surge in valuation and autonomous driving startups basically have an automatic billion-dollar valuation, which would be hard to pull for Tesla.

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