Tesla Shareholders Approve Massive Compensation Package For Elon Musk

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The approving vote took place at Tesla's annual shareholders meeting in California.

Musk owns approximately 20% of Tesla shares and recused himself from voting, as did his brother, Kimbal, who sits on the Tesla board.

Two firms that evaluate proxies for investors recommend that shareholders vote against the pay plan, which they say is unprecedented in size for a US public company.

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.

But it requires Musk to reach a dozen targets and achieve tremendous growth that would make Tesla one of the most valuable companies worldwide in order for him to cash in. That's an astronomical sum, compared to what other US executives make. Some large investors have said the package aligns with their interests, signaling they don't mind if Musk gets wealthier, as long as they also see big returns. But the focus was more on making sure products get out to market, and less on financial metrics.

Tesla stock surged on Wednesday by nearly 4% to $322.

Gracias says shareholders realize that Tesla is often optimistic about hitting production milestones and is working hard to achieve them. For the award to fully vest, Telsa has to grow to become a $650 billion company, which is more than 10 times its current value of about $53.5 billion. Musk will collect additional stock grants if the company increases its market capitalization. If Musk is successful, Tesla's investors might feel the effects of both.

For each goal hit, Musk will get stock awards of one percent of Tesla's current total outstanding shares. As a result, the award indicates that Musk has other ideas for the company, including transforming energy storage through utility-grade applications and the kinds of future-of-mobility plans outlined in his Master Plan, Part Deux.

Israel's business journal Globes is reporting based on unnamed "industry sources" that Musk's visit in Israel includes a stop at artificial intelligence company Cortica to discuss an investment or even a possible acquisition by Tesla. He also runs the private space firm SpaceX. That's led to concerns he's looking to lessen his involvement with Tesla. Now, its rockstar CEO will have further incentive to stay with the company.

Several top executives have left the company lately, calling into question what Tesla would do if Musk chose to do something else.

Ahead of the vote, a top investor in Tesla Inc and a major proxy adviser offered opposing views on whether to support the compensation arrangement, which required majority approval from shareholders. "And we will continue to do this, to develop it as has never been done in the history of Israel", the prime minister proudly exclaimed.

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