The huge $56 billion compensation package for Tesla CEO Elon Musk is the focus of attention when Tesla shareholders have to make the final decision: to approve or reject this controversial remuneration.

Elon Musk’s salary war

Tesla Chairman Robyn Denholm is attempting to warn Tesla shareholders as she asks them to re-approve the record $56 billion pay package awarded to Mr. Musk six years ago.

She said that the compensation package along with the stock requirements will push CEO Elon Musk to “make the same demands seen over the last five years for many years to come”.

The vote is considered a “referendum” on how much Tesla needs Elon Musk in the future, even if he is not completely focused on this electric car company.

A re-vote at the shareholder meeting in June will be a signal of whether investors are starting to tire of a less engaged CEO, despite his incredible achievements over the past six years. .

According to a board committee note six years ago, the massive compensation package is intended to ensure Elon Musk remains an “actively engaged chief executive officer” of Tesla.

However, today, Tesla CEO is much busier than 6 years ago. He is running 6 companies instead of 4 as before (plus Twitter and artificial intelligence startup xAI). 

In addition, he became an increasingly active presence in controversial political and social issues. These things make buyers begin to lose interest in Tesla.

Valuing billionaires

The story takes place in the context of Tesla’s growth becoming increasingly gloomy in the face of fierce competition from Chinese electric cars, inexplicably large-scale staff cuts and focus on unfamiliar segments.

Meanwhile, 6 years ago, Tesla’s scale was only a fraction of its current scale – both in terms of valuation and sales. 

At that time, Tesla had the popular electric sedan Model 3 to bet on and was successful, bringing Tesla’s market value to $650 billion from about $60 billion. 

From here, Elon Musk truly became one of the richest people in the world.

6 years ago, Elon Musk was also in a position of having “nothing” but bold ideas and always trying to prove himself to shareholders. To convince shareholders, Elon Musk even starved and slept on the factory floor…

6 years later, the bet on Cybertruck was not really successful, the low-cost Model 2 has not yet appeared, and there was even information about it being shelved. 

Elon Musk is no longer interested in Tesla when he has many other projects. He even gave an ultimatum that he would take ideas about AI and robotics elsewhere if he was not given greater control at Tesla.

Supporters say people are misunderstanding what Elon Musk means. They said he just wanted to control AI technology because it was too dangerous if it fell into the hands of others.

Regardless, Tesla shareholders’ vote on Elon Musk’s compensation package not only demonstrates confidence in this CEO, but is also an important moment that could reshape executive pay standards. future CEO.

The prospect of Elon Musk leaving Tesla has become a bargaining chip in this compensation war. Elon Musk’s announcement of a reduced role if demands are not met poses a balancing problem between his value to Tesla and the cost of retaining him.

As shareholders weigh their votes, they face a complicated calculation: Is Elon Musk worth an unprecedented $56 billion and can Tesla afford to risk it? Is it possible that this CEO will leave?