Musk wins all the way and regains his incredible bonus of 56 billion dollars

Musk wins all the way and regains his incredible bonus of 56 billion dollars
Musk wins all the way and regains his incredible bonus of 56 billion dollars

Tesla shareholders have just overwhelmingly approved the maintenance of CEO Elon Musk’s extraordinary compensation plan, worth $56 billion, and the company’s move to Texas. But if he has undoubtedly won a round, he has not yet completely won the war.

Elon, with his usual modesty, had already announced his victory “by a large majority” over X before the end of the votes. At the annual shareholder meeting in Austin, his victory is indeed complete since shareholders have just approved his monster compensation and his plan to move Tesla’s headquarters to Texas.

The biggest bonus in history

Earlier this year, a Delaware court ruled that Mr. Musk’s bonus — a set of stock options, the largest amount in U.S. history — was not not valid. The stock option package had already been approved by shareholders once in 2018, but it was called into question after Musk lost a lawsuit brought by a Tesla shareholder who believed the bonus was excessive.

The Delaware judge concluded that Musk had too much influence to discuss his bonus on Tesla’s board. The shareholders having been kept in ignorance of the links which united them, they did not have the possibility of making an informed decision, said the judge.

The new vote doesn’t mean Musk will automatically get the stock package, but it does increase his chances. Because if Musk has won a battle, he has not yet won the war. Thursday evening’s vote does not in fact mean that the judgment no longer applies. Only that Tesla hopes to convince the judges to reverse their decision. The move of the company’s legal headquarters to Texas may also mean that Tesla wishes to turn to the courts of the latter state, in the hope of a more favorable justice. According to Les Echos, however, judge Kathaleen McCormick seems to consider that this option is unlikely.

Then the value of Musk’s pay package has now fallen to around $44.9 billion due to the recent drop in Tesla’s stock price.

Finally, to obtain the bonus, the billionaire must remain at the head of the company for five years. Which doesn’t seem like a problem since he said that “I can’t just stop everything and leave, I don’t want to anyway.”

The only certainty is therefore that this vote undoubtedly confirms Musk at the head of the six companies.

An unusual boss

In addition to compensation, shareholders also agreed to move Tesla’s official headquarters from Delaware to Texas. The move is seen as an important step in strengthening Musk’s grip on the company. Brandon Ehrhart, Tesla’s legal counsel, announced the results without specifying the number of votes, while Mr. Musk enthusiastically thanked the crowd. A skillfully maintained enthusiasm. Elon Musk and his teams led an intense communications campaign to convince small carriers.

Mr. Musk also managed to mobilize individual investors, who own about 30% of Tesla’s shares, to support the proposals. Despite opposition from large institutional investors and consulting firms, Mr Musk has also managed to rally influential investors such as Vanguard and BlackRock. And Ron Baron, boss of Baron Funds which has invested around three billion dollars in Tesla, even went so far as to say that “Tesla is better with Elon. Tesla is Elon. Elon earned his salary.” The support of these major players is a big victory for Musk and Tesla.

This result is also a victory for Tesla board member Robyn Denholm. In recent months, she has emerged as the face of the campaign to persuade shareholders through social media. She hammered out the slogan “a deal is a deal”. “It is clear that this is not about money,” Ms. Denholm said in a letter filed with the SEC, the securities watchdog. “We know that Elon is one of the richest people on the planet, and would remain so even if we backed away from the commitment we made in 2018.”

THE USUAL WAY COMPANIES REWARD THEIR KEY EXECUTIVES WILL NOT WORK FOR TESLA.

Robyn Denholm, Tesla board member

Tesla’s value fell below target

It thus refers to the context of the premium. This is part of a performance bonus intended for Musk, for Tesla’s good results in 2018. “Elon is not a typical executive, and Tesla is not a typical company. Therefore, the usual way companies reward key executives will not produce results for Tesla. Motivating someone like Elon takes something different.”

At the time, Musk was entitled to receive just over 300 million shares of Tesla stock at 2018 prices if the company achieved a number of ambitious goals over a period of up to 10 years. This included increasing the market value from over $50 billion to $650 billion. Based on this target, the value of the package has been estimated at around $56 billion. But stock prices fluctuate. After rapid growth and thanks to the initial euphoria related to electric cars, Tesla quickly reached the target, but the demand for electric cars has since cooled significantly and Tesla’s value has fallen below the objective.

Artificial intelligence

At the shareholders meeting, Mr. Musk gave another glimpse into Tesla’s future as an artificial intelligence and robotics giant. He discussed ambitious plans for a fleet of fully autonomous cars and tens of billions of humanoid robots, which he said could boost Tesla’s revenue to trillions of dollars. This vision was greeted with enthusiasm by the shareholders present.

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