Concerns have surfaced among Tesla shareholders regarding a proposed compensation plan for Elon Musk. This plan could potentially reward Musk with over $1 trillion over the next decade. The proxy advisory firm Institutional Shareholder Services (ISS) strongly recommends that shareholders reject this plan.
Tesla’s Compensation Proposal for Musk
The compensation plan aims to retain Musk’s focus on Tesla, minimizing his attention on other business ventures. However, ISS criticizes the plan, stating that it lacks specific incentives to guarantee Musk’s commitment to Tesla. The advisory firm emphasizes that this could undermine the award’s fundamental purpose.
Potential Impact on Shareholders
- ISS labels the grant’s value as “astronomical,” indicating it could dilute shareholders’ value.
- Musk currently owns 19.8 percent of Tesla, raising questions about the necessity of the proposed award.
- The plan is set for a shareholder vote on November 6.
Details of the Plan
The proposal could provide Musk with 423.7 million Tesla shares, increasing his ownership stake to approximately 28.8 percent. These shares would be granted in 12 increments as Musk meets specified performance goals.
Valuation Estimates
- Tesla’s estimated value of shares stands at $87.8 billion.
- ISS values them higher at $104.4 billion.
If Musk achieves all market capitalization goals, the total value of the shares could exceed $1 trillion. The ISS report warns that achieving these milestones requires historic growth, projecting a market cap target of $8.5 trillion.
Market Capitalization Goals
The growth targets include a range of ambitious operational goals:
- Delivering 20 million vehicles.
- Achieving a $2 trillion market valuation.
- Securing 10 million Full Self-Driving subscriptions.
- Delivering 1 million AI robots.
- Launching 1 million robotaxis.
- Reaching a $400 billion adjusted EBITDA.
If Musk successfully meets these milestones, the resulting share value would significantly impact Tesla’s market position compared to its competitors in the AI field.
