3 things Elon Musk must do to earn $1 trillion pay package

In a major move, shareholders of Tesla Inc. have approved Chief Executive Officer Elon Musk’s record $1 trillion compensation package, the first of its kind in corporate history.

 

The long-awaited proposal was approved with over 75 per cent of shareholders being in favour in its annual meeting on Thursday (local time). This 10-year payout plan will make the leader of SpaceX, Tesla, X (formerly Twitter), the first-ever trillionaire.

 

Presently, Musk is the richest man with a total wealth of $461.1 billion, according to Bloomberg. So far this year, his wealth has risen by 6.6 per cent or $28.7 billion. He is followed by Oracle's Larry Ellison ($303.1 billion) and Amazon Inc.'s Jeff Bezos ($263.7 billion).

   

Not all investors okayed the plan. Norway’s sovereign wealth fund and proxy firms Glass Lewis and Institutional Shareholder Services opposed the plan, citing concerns that the massive pay could dilute shareholder value and concentrate too much power in Musk’s hands.

 

However, Tesla's chief has a set of benchmarks to meet to earn his full payout, which includes growing the company's market value to expanding the robotaxi business.

Elon Musk's $1 trillion test

Market cap ambition: The Austin-based electric vehicle maker's market cap must soar to a massive $8.5 trillion, from the peak 2024 value of $1.5 trillion. A market cap of $8.5 trillion would be more than double that of the world’s most valuable company, Nvidia Corp.

 

As per Bloomberg, should he hit the $8.5 trillion mark, Musk's stake in the EV maker will be valued at around $2.4 trillion. His net worth would exceed the current gross domestic product of all but seven countries, the report said.

 

Operational milestones: The Tesla chief must help achieve 20 million vehicle sales, along with 10 million active FSD subscriptions. Tesla should have delivered 1 million robots and must have deployed 1 million robotaxis in commercial operation.

 

Tesla launched its robotaxi service to a handful of users in Austin in June this year. In the earnings call, Musk said he plans to expand to as many as 10 metropolitan areas by the end of the year.

 

Financial goals: From a $50 billion adjusted Ebitda (earnings Before Interest, Taxes, Depreciation, and Amortisation) target, Musk has to help achieve $400 billion adjusted Ebitda over the 10-year period.

 

Meanwhile, its global vehicle deliveries dropped by 13 per cent in the first half of the year. In the latest September quarter, the EV market's operating profit fell by 40 per cent and extended the weaker-than-expected profit to four straight quarters, as per Bloomberg estimates.

 

However, in a temporary boost, the carmaker posted a record third-quarter sales, driven by a $7,500 US tax credit for EV purchases, which expired September 30.