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Tesla’s $1 Trillion Question · Elon Musk Podcast

• 0:01
  Hey everybody. Welcome back to the Elon Musk
• 0:04
  Podcast. This is a show where we discuss.
• 0:07
  The Critical. Crossroads.
• 0:08
  That shape SpaceX. Tesla X, The Boring Company and
• 0:12
  Neurolink. I'm your host, Will Walden.
• 0:16
  Late Monday, Tesla board chair warned shareholders that Elon
• 0:20
  Musk could walk away from the company if they reject a new
• 0:24
  compensation plan worth up to nearly $1 trillion.
• 0:29
  The letter set the stakes for a high pressure vote that closes
• 0:33
  on November 5th and leads into Tesla's annual meeting on
• 0:36
  November 6th. In this episode, I'll unpack
• 0:40
  what the board asked for, why it chose this moment, and how the
• 0:44
  payout structure frames Tesla's next decade.
• 0:48
  Now, what question sits at the center of this fight?
• 0:52
  The board's message leaned on a simple claim that Musk needs
• 0:55
  stronger incentives and influence to drive Tesla's push
• 0:59
  into autonomy and robotics. I'll explain how the proposal
• 1:02
  ties his reward to hard performance targets.
• 1:05
  Over about. 7 1/2 years and while outside advisors see the
• 1:09
  math still creates heavy dilution for current holders.
• 1:13
  Now I'm your guide for this breakdown because I cover these
• 1:15
  votes, these governance fights in these capital structures in
• 1:20
  plain English every single day. Now, in this episode, I'll also
• 1:24
  addressed what history from last year's pay saga tells us about
• 1:27
  how this might end up. Now we're talking about a board
• 1:33
  backed push to approve a record scale CEO compensation plan.
• 1:38
  And the plant arrives days after Musk told investors he will not
• 1:42
  pour himself into building a humanoid robot in an autonomy
• 1:45
  stack without what he views as adequate control.
• 1:50
  And the calendar now compresses every argument into the next 10
• 1:54
  days of voting. Tesla Chair Robin Denholm told
• 1:59
  investors that failing to pass the package creates a real risk
• 2:03
  that Musk reduces his time at Tesla.
• 2:05
  She framed the vote as a fundamental choice about whether
• 2:08
  investors want to keep Musk in the CEO role and motivate him to
• 2:13
  scale autonomy and the Optimist program.
• 2:16
  That framing set a clean binary for a dispersed shareholder base
• 2:21
  and now includes many index funds in retail voters.
• 2:26
  And the proposed package would reach nearly $1 trillion only if
• 2:32
  Tesla clears a ladder of aggressive performance
• 2:35
  milestones over roughly 7 1/2 years.
• 2:39
  You know the structure mirrors the company's habit of trying
• 2:42
  compensation to market cap and operational targets rather than
• 2:46
  salary and cash bonuses. That design makes the headline
• 2:50
  number huge while making the actual payout contingent on
• 2:54
  extraordinary execution. And Musk told investors that he
• 2:58
  will not feel comfortable building a large scale robot
• 3:00
  program and autonomy platform if he lacks strong influence
• 3:05
  through equity ownership. And he worries that work he
• 3:08
  leads today could be derailed later if his control weakens.
• 3:13
  So he wants equity that secures A durable voice.
• 3:17
  That rationale connects the pay plan to a specific product road
• 3:20
  map rather than a general reward for past performance.
• 3:25
  Now today, Musk owns about 15% of Tesla, which already gives
• 3:30
  him heavy influence but not a firm lock out of control.
• 3:34
  The new grant would push control dynamics further toward him if
• 3:38
  milestones hit, which can comfort some investors who value
• 3:43
  continuity over leadership. And it can alarm others who
• 3:48
  price checks and balances. Shareholders therefore must
• 3:52
  parse control drift as much as dollar figures.
• 3:56
  Now, 2 powerful proxy advisors, ISS and Glass Lewis, urge
• 4:01
  shareholders to vote against the plan on size and dilution
• 4:06
  concerns. Several state treasurers and
• 4:08
  investor groups also urged a no vote to question the board's
• 4:11
  oversight of Musk and long term value delivery.
• 4:15
  These recommendations matter because many institutions follow
• 4:18
  them or use them to justify their own votes.
• 4:22
  Last year, a Delaware court voided Musk's roughly $55
• 4:25
  billion reward after finding flaws in the process and the
• 4:29
  board's independence, even though shareholders had approved
• 4:32
  the plan twice. Tesla has appealed to the
• 4:35
  Delaware Supreme Court and has moved its incorporation to
• 4:38
  Texas, which resets the legal backdrop away from Delaware's
• 4:41
  deep case law. Now, legal history hovers over
• 4:44
  this new vote and feeds skepticism about governance.
• 4:47
  Quality in the board's current letter reprises last year's
• 4:52
  central threat that Tesla could lose Musk if investors do not
• 4:56
  endorse the compensation structure.
• 4:58
  The approach worked in June, when shareholders backed the $55
• 5:01
  billion package after a heavy campaign even as litigation
• 5:05
  continued. And the board now appears to
• 5:08
  rely on the same fear of losing the CEO to carry a much larger
• 5:11
  plan over the line. Musk escalated the rhetoric on
• 5:14
  the latest earnings call by attacking the proxy advisors
• 5:17
  with inflammatory language and paying them as hostile to
• 5:20
  Tesla's mission. That posture seeks the frame the
• 5:24
  vote as a choice between builders and gatekeepers, which
• 5:28
  can energize loyal investors can also harden resistance among
• 5:31
  institutions that value governance norms.
• 5:35
  Also, the tactic keeps media attention on the vote during the
• 5:38
  short window when balance arrive.
• 5:40
  You know the calendar now controls the pacing.
• 5:43
  Shareholders can vote through November 5th, and Tesla plans to
• 5:46
  share preliminary results at the November 6th annual meeting.
• 5:50
  That schedule leaves limited time for new disclosures or
• 5:53
  sweeteners that could change minds.
• 5:56
  And the core financial question asks whether the incremental
• 6:00
  value must can unlock an autonomy energy and robotics
• 6:04
  exceeds the dilution and governance cost of this grant.
• 6:08
  Now I bottled this by comparing the potential market cap pass
• 6:11
  that clear the milestones with the ownership shifts that come
• 6:14
  with new stock issuance. The answer depends on credible
• 6:17
  timelines for FSD revenue optimist commercialization and
• 6:21
  energy storage growth. And each line item carries
• 6:25
  technical and also regulatory risk.
• 6:28
  And the governance question asks whether this board can oversee
• 6:32
  the CEO while holding him central to the plan.
• 6:35
  The Delaware ruling last year raised doubts about board
• 6:38
  independence and process quality, which investors now
• 6:41
  must weigh against Tesla's record of equity linked
• 6:44
  incentives. And the Texas incorporation move
• 6:47
  adds another variable because it changes the form and doctrine
• 6:51
  for future disputes. The strategy question asks how
• 6:56
  much of Tesla's valuation already prices in the future
• 6:59
  must describes. If the current price already
• 7:01
  assumes high margin autonomy and humanoid robotics to scale, then
• 7:05
  the upside that would justify the award narrows.
• 7:09
  If the price still leans on EV and energy fundamentals, then
• 7:12
  incredible autonomy breakout could deliver enough value to
• 7:16
  offset any dilution now. The communication strategy from
• 7:20
  the board also carries risk. Repeating last year's threat can
• 7:24
  persuade some holders, but it can fatigue others who want
• 7:27
  fresh reasoning, clear milestones, and tighter
• 7:30
  guardrails. I would advise the board to
• 7:32
  publish a granular milestone table, explicit dilution bands
• 7:37
  under different price paths, and a sunset clause tied to defied
• 7:42
  autonomy adoption thresholds. And the near term market impact
• 7:46
  will hinge on 2 signals. First, early vote totals that
• 7:50
  leak to large holders can move sentiment into the meeting.
• 7:53
  Second, any fresh commentary from the earnings call,
• 7:56
  follow-ups or an updated proxy settlement can change the
• 8:00
  perceived balance of risk and reward.
• 8:03
  Now I'm going to be watching for signs that large index funds
• 8:06
  break from proxy advisor guidance because these decisions
• 8:09
  often tip outcomes and the long term impact will flow from
• 8:14
  execution against autonomy and robotics claims that underpin
• 8:18
  the package. If Tesla delivers commercial
• 8:20
  autonomy products with defensible margins, then the
• 8:24
  equity issuance that funds control could look cheap.
• 8:28
  If timeline slips though, then shareholder patients for
• 8:31
  concentrated control can thin quickly.
• 8:34
  Now here, let's I'm just going to break it down for you real
• 8:36
  quick. Short version, Tesla's board is
• 8:40
  asking investors to approve a multi year equity plan that
• 8:43
  could pay Musk up to nearly $1 trillion, with voting set to end
• 8:47
  November 5th. In meeting results due on the
• 8:49
  6th, proxy firms and several investors urge a no vote, while
• 8:55
  the board warns that Musk could walk away if it fails.
• 9:02
  Hey, thank you so much for listening today.
• 9:04
  I really do appreciate your support.
• 9:06
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• 9:22
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• 9:25
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• 9:30
  and each other and I'll see you tomorrow.