Elon Musk, the mogul behind Tesla, is about to receive a massive multimillion-dollar salary package approved by the company’s shareholders at their annual meeting. Additionally, they decided to move Tesla’s headquarters from Delaware to Texas.
During the event, Musk’s supporters cheered him on as he danced with a wide smile and expressed his love for the shareholders. This endorsement renews the compensation plan initially granted in 2018. In total, Musk could pocket around $48 billion, making it the largest payout ever given to a CEO.
A Legal Obstacle in the Way
Despite the shareholders’ support, a legal hurdle remains. Judge Kathaleen McCormick of Delaware had invalidated the original compensation plan in January 2024, citing issues in the decision-making process. The closeness between Musk and some board members was a critical point.
However, with this new vote, the judge might reconsider her decision, as the shareholders seem better informed this time. Musk, on his part, was optimistic and declared, «This isn’t about writing a new chapter; it’s about starting a new book together.»
Musk’s Multibillion-Dollar Move
The amount of money Musk could receive has raised some eyebrows. «Does he really need nearly $50 billion to be motivated to work on Tesla?» asks Hamza Mudassir, a business strategy expert. But this compensation package has several reasons: it reassures the markets and ensures Musk’s loyalty to the company.
Shareholders know that keeping Musk happy is crucial for Tesla’s future. A motivated Musk is the best bet to attract new investors and maintain the company’s stability. Additionally, the package will allow him to increase his control over Tesla, from 13% to 20% of the shares, with a goal of reaching 25%.
The Cult of Personality at Tesla
This strong connection between the shareholders and Musk can give the impression that the CEO has total control over the company. This isn’t exclusive to Tesla; companies like Alibaba and Apple have also seen a strong cult of personality around their leaders.
At Tesla, over 40% of the shareholders are individuals, not institutional investors, creating a loyal fan base for Musk. Although this can be beneficial initially, over time the board of directors needs more independence to properly oversee the CEO’s decisions.
Tesla’s stock trajectory reflects these challenges. After 2018, the stock price rose from $20 to over $400 in 2021, but since then, it has lost 50% of its value. Time will tell if Musk’s influence remains an asset or a risk for Tesla.