Musk’s $1 trillion carrot

Tesla shareholders just put all of their eggs in the Elon Musk basket—and it's an expensive one.

Musk just leveraged his position at Tesla to extort convince shareholders that he deserves $1 trillion—the largest pay package in history and far more than any peer CEO has ever been awarded. This afternoon, shareholders gathered to decide on Musk’s pay package, and will likely approve the gargantuan sum. Tesla shares sank 3.54% today.

The deets: The eye-popping package, which was first proposed by the board of directors in September, will give Musk up to $1 trillion worth of Tesla stock over the next decade if the company meets certain milestones, such as growing its profitability 30 times, quintupling its market value, and becoming a major AI and robotics powerhouse. Even if he doesn’t successfully meet the lofty performance goals, he will still get a payout in the tens of billions.

The logic justifying that paycheck goes something like this: Musk needs a worthwhile incentive to bring his attention away from his slew of other ventures and political antics. But critics of the package, like Norway’s $2 trillion sovereign wealth fund and CALpers, argue the deal gives Musk way too much power over Tesla, and that equating him with the brand itself isn’t necessarily good for the company.

It’s all about Elon

Adding fuel to the fire is the fact that Musk said if the package didn’t go through, he would abandon Tesla altogether, a threat that seriously spooked shareholders. While Musk has been a brazen and controversial figure, many Tesla investors see him as the messiah of AI and robotics, and argue that his presence at Tesla is quite literally priceless.

“In a nutshell, getting Musk's pay package approved will be a big step towards advancing Tesla's future goals with the autonomous and Robotaxi roadmap the first task at hand for Tesla and Musk,” wrote Wedbush analyst and Tesla bull Dan Ives in a note.

What’s next: The fight might not be over yet: Shareholders who voted nay today will likely sue to block the package, just as they did in 2018.

It’s never a dull moment for Tesla investors.—LB