Latest / Elon Musk Podcast / Tesla awards Musk $29 billion pay package

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Tesla awards Musk $29 billion pay package · 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, the Shape, SpaceX, Tesla X, The
• 0:11
  Boring Company, and Neurolink. I'm your host, Will Walden.
• 0:17
  Tesla shareholders have approved a $29 billion stock grant for
• 0:21
  Elon Musk, reviving a massive pay package that a Delaware
• 0:25
  court had voided earlier this year.
• 0:28
  This vote gives Musk the green light to claim one of the
• 0:30
  largest compensation deals in corporate history, but it also
• 0:34
  raises new questions about the control of the shareholders and
• 0:38
  executive oversight for Elon Musk.
• 0:41
  The approved deal allows Musk to access 303,000,000 stock
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  options, which had originally been valued at around $56
• 0:49
  billion when first agreed upon in 2018.
• 0:52
  A Delaware judge struck down the plan in January, calling it an
• 0:56
  unfathomable sum and ruling the Tesla's board had not negotiated
• 1:00
  the package fairly. Now, the board has now
• 1:04
  reapproved the same terms after a June shareholder meeting that
• 1:08
  Tesla said reaffirmed investors support for Musk's leadership
• 1:12
  and the future of the company. Now, Tesla made the package
• 1:16
  contingent on hitting certain performance goals, though Musk
• 1:19
  has already met those. These include Tesla reaching a
• 1:22
  $650 billion market valuation and achieving specific revenue
• 1:27
  and profit benchmarks. And while the company has seen
• 1:30
  its market cap drop below the level in recent months, the
• 1:34
  targets had already been achieved prior to the legal
• 1:36
  ruling that nullify the award. Now, Tesla argue that this made
• 1:40
  Musk eligible to receive the options regardless of the
• 1:43
  stock's current trading value. Tesla relocated its legal home
• 1:46
  from Delaware to Texas following the January ruling.
• 1:49
  They were done with it. The move came after the Delaware
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  Chancery Court's decision blocked the original
• 1:54
  compensation agreement. Tesla used the transition to
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  push for a shareholder vote under Texas corporate law, which
• 2:01
  lacks some of the stricter legal standards found in Delaware, and
• 2:05
  the vote passed by a huge margin, according to the
• 2:07
  company. Tesla has framed the approval as
• 2:10
  necessary to retain Musk, who has increasingly divided his
• 2:14
  attention across several companies, SpaceX, XAIX, and
• 2:19
  Neurolink, etcetera. And the board and Musk himself
• 2:23
  have claimed that failure to approve the package could cause
• 2:25
  him to disengage from Tesla or even shift its AI and robotics
• 2:30
  projects to one of his other ventures.
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  So he's kind of holding them hostage.
• 2:36
  If he doesn't get his money, he's going to leave or take some
• 2:39
  of his technologies someplace else.
• 2:41
  Is that the right thing for somebody like Elon Musk to do?
• 2:44
  Let me know in the comments of whatever platform you're on
• 2:47
  right now. It's an interesting thing to
• 2:49
  think about. Is he able to do this?
• 2:52
  Is he allowed to do this? I want to hear what you say.
• 2:54
  Let's talk about this now. Some of these shareholders argue
• 2:58
  that Musk's ongoing involvement is essential to Tesla's future
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  product pipeline, particularly full self driving and optimists.
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  Tesla didn't provide updated financial details or accounting
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  for the new approval, but analysts estimate the package's
• 3:12
  current value at around $29 billion due to the stocks lower
• 3:17
  trading price. And if exercised, the options
• 3:20
  would grant Musk a roughly 20% stake in Tesla, further
• 3:23
  consolidating his control. Also, Musk also already owns
• 3:28
  around 13% of the company, even after selling billions of
• 3:31
  dollars worth of stock to fund his $44 billion acquisition of
• 3:36
  Twitter. Now, there's a thing with the
• 3:42
  institutional investors here. Norge's bank and California's
• 3:46
  public employee retirement system, They oppose this deal.
• 3:49
  They're part of the shareholders.
• 3:51
  They cited governance concerns and warned that the plan gives
• 3:53
  Musk too much unchecked authority.
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  So smaller shareholders argued that Musk's pay package creates
• 3:59
  A distorted incentive structure that could lead Tesla to
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  prioritize high risk growth targets over sustainable long
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  term positioning and planning. Tesla's retail show holder base,
• 4:12
  which includes many vocal Trump supporters and Musk supporters,
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  played a major role in swinging the vote in his favor.
• 4:18
  The legal situation remains unresolved.
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  Chancellor Kathleen McCormick of the Delaware Court of Chancery,
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  who originally voided the package, has not yet ruled on
• 4:27
  whether Tesla's Texas vote overrides her decision.
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  The challenge is likely, especially since the case
• 4:33
  effects how companies can retroactively approve executive
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  compensation, and Musk has not indicated whether he will
• 4:40
  exercise the stock options immediately or wait.
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  But his voting power in Tesla is now set to increase regardless.
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  The board has maintained that the 2018 plan was based entirely
• 4:52
  on performance and required Musk to deliver concrete results
• 4:55
  before gaining any compensation. The company claims that the
• 4:58
  approval shows that shareholders remain aligned with Musk's
• 5:01
  aggressive goals for expansion in autonomous driving, battery
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  storage, and AI. However, several watchdog groups
• 5:08
  argue that Tesla's board structure remains too close to
• 5:11
  Musk to provide independent oversight.
• 5:15
  Now, some people will argue that the structure of Musk's deal
• 5:18
  continues to set a dangerous precedent for executive
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  compensation, say it could influence other public companies
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  to approve similar huge payouts that reward already wealthy
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  executives with massive stock windfalls.
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  A Musk's original 2018 package had no salary or cash bonuses,
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  only stock options that vested upon hitting very high growth
• 5:39
  targets. The new approval does not change
• 5:42
  that structure, but cements its results.
• 5:45
  And Musk has not committed to dedicating full time focus on
• 5:48
  Tesla, though he's still at SpaceX.
• 5:50
  And that's even after security vote.
• 5:53
  SpaceX, XAI, they all continue to expand and overlapping
• 5:57
  sectors. XAI recently raised $6 billion
• 5:59
  and lost a chatbot that directly competes with ChatGPT in factor.
• 6:04
  Investors will now watch whether Musk prioritizes Tesla's AI over
• 6:10
  his other interests like XAI and SpaceX, given that much of
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  Tesla's value is tied to expectations on full self
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  driving, autonomy for driving, and also cyber cab and the
• 6:25
  robots too. Hey, thank you so much for
• 6:30
  listening today. I really do appreciate your
• 6:32
  support. If you could take a second and
• 6:34
  hit the subscribe or the follow button on whatever podcast
• 6:36
  platform that you're listening on right now, I greatly
• 6:39
  appreciate it. It helps out the show
• 6:41
  tremendously and you'll never miss an episode.
• 6:44
  And each episode is about 10 minutes or less to get you
• 6:47
  caught up quickly. And please, if you want to
• 6:50
  support the show even more, go to Atreoncom Stage Zero.
• 6:56
  And please take care of yourselves and each other.
• 6:58
  And I'll see you tomorrow.