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New Delhi: On Thursday, Tesla stockholders will vote on whether or not to accept a historic $1 trillion compensation package for CEO Elon Musk. The vote that will be disclosed at the Tesla annual shareholder meeting in Austin, Texas, may redefine the dynamics of leadership in the company and will clarify to what extent Musk will have any control over the future of the company.
The package, which is expected to last at least seven and a half years, is pegged to payouts based on performance goals covering market capitalisation, operating profits, and vehicle deliveries. Providing it is realised, it would raise the ownership of Musk in Tesla by more than 25 per cent. Critics claim the plan is outrageous, and those who support it claim Tesla would not be successful without the vision and leadership of Musk.
The Tesla Chairperson Robin Denholm has been coming out publicly to defend the pay plan, noting that the AI, robotics and autonomy of Tesla would not have been realised without the efforts of Musk. As Denholm informed shareholders, Tesla would lose its value without Elon as the man behind the Tesla transformation.
Musk indicated that he might step down or exit in case his ownership is not expanded. He explained the compensation by the fact that it will allow him to have an impact on the future projects at Tesla, such as its endeavour toward creating a robot army.
The plan has received strong criticisms from advisory firms such as Glass Lewis and ISS, which have expressed concerns on the structure and termed it unprecedented. Both the Norway sovereign wealth fund and the New York State Comptroller, Thomas DiNapoli, have voted against the package, basing their reasons on the size of the package and the potential risk of over-reliance on Musk.
Conversely, Florida authorities supported the move, terming it as a gold standard in executive compensation. Tesla fans use Tesla and SpaceX history with Musk to argue that he is capable of generating enormous shareholder value.
Anti-Musk activists will likely hold a protest in front of Tesla in the Austin gigafactory when this is voted on, as the concern is increasing about the influence of Musk and his political ties. Opponents believe that no person can possess such immense wealth or power, and particularly one whose white-collar crimes are believed to have polarised people.
Nevertheless, Musk is not afraid despite the controversy. In the near future, he even forecasted that Tesla would be the most valuable company in the world by a very large margin, provided it achieves its ambitions of AI and self-driving technologies, which, according to a great number of investors, is already a good reason to have him stay firmly in place in the chair.
