‘Hot damn, I love you’: Elon Musk after Tesla shareholders approve $56 billion pay package
Tesla CEO Elon Musk was elated after retail investors approved his controversial $56 billion pay package during the company’s shareholder meeting in Austin, Texas.
Following the approval of his pay package, a jubilated Musk appeared on stage and said, “I just want to start off by saying, hot damn, I love you guys!” “We have the most awesome shareholder base. I mean it’s just incredible,” Musk added.
The approval marks a significant win for Musk, who had campaigned for the package’s reinstatement after a Delaware judge nullified it in January, citing flaws in the original approval process due to insufficient independent oversight.
While some institutional investors voiced concerns over excessive compensation, retail investors rallied behind Musk. Many took to social media platforms like X (formerly Twitter), advocating for Musk and highlighting his contributions to Tesla’s success.
This active participation from small investors underscores Musk’s unique ability to foster loyalty. The CEO engaged with them through regular social media posts, a dedicated website explaining the proposals, and even factory tours for some voting shareholders.
“About 90% of the retail investors who voted were in favor,” Musk proudly shared on X over the weekend. This overwhelming support, along with backing from some large institutional investors, secured the vote.
However, legal challenges in Delaware persist, with the judge previously noting the Tesla board’s close ties to Musk.
Musk’s $56 billion pay package
Elon Musk’s $56 billion pay package is part of an ambitious ten-year performance-based plan. He was granted stock options that would vest in 12 tranches upon meeting a series of demanding milestones, including market capitalization, earnings, and revenue targets.
The scale of the potential reward was enormous: 303 million stock options, representing roughly 12% of Tesla’s outstanding stock in 2018. Each tranche unlocked 1% of these options as Musk met 28 challenging targets.
By 2023, Musk’s bet on Tesla’s growth had paid off.
The company’s market capitalisation soared past the $650 billion target in 2020, and it consistently exceeded earnings expectations. With most revenue milestones achieved, Musk earned nearly all his potential stock options.
The current value of this package is $56 billion.
With a strike price of $23 per option (adjusted for stock splits) and Tesla’s share price around $200, each option holds an intrinsic value of approximately $180. Multiplied by the nearly 303 million options, the astronomical sum becomes evident.
Musk’s 2018 compensation plan was a high-stakes wager on his ability to transform Tesla from a $60 billion company into a profit-generating giant valued at over $650 billion.