Musk Offers Lofty Promises After $1 Trillion Tesla Payday (1)

Elon Muskresponded in kind to Tesla Inc. investors approving his $1 trillion compensation package, making a series of extravagant predictions about what the company will be capable of in the years to come.

Tesla’s humanoid robot will progress from simple tasks, like handing out bags of candy, to performing surgery with “beyond human” levels of precision, the chief executive officer said Thursday.

Elon Musk during the Tesla shareholder meeting on Nov. 6.

Source: Tesla Inc.

Its flagging car business — headed for a second year of shrinking sales — will aim to ramp production back up roughly 50% by the end of 2026, he said.

The leader of SpaceX even went so far as to predict that Tesla’s robot, called Optimus, and vehicles will “play a big role” in someday establishing bases on the moon and Mars. “It’ll be something cool, next-level moon buggy or Mars buggy,” he told a shareholder.

Musk, 54, will need to realize at least some of these otherwordly ambitions to lead Tesla to the market value and operational milestones laid out in the pay deal that shareholders passed during the company’s annual meeting. More than 75% of votes cast were in favor, General Counsel Brandon Ehrhart said, eliciting a standing ovation from the crowd gathered at Tesla’s factory in Austin.

The stock awardclears a path for Musk, the world’s richest person, to become the first-ever trillionaire and expand his stake in Tesla to 25% or more over the next decade.

“It’s not just a new chapter for Tesla, it’s a new book,” Musk said. “And that new book is massively increasing vehicle production and ramping up Optimus production faster than anything’s ever been ramped up before in human history.”

The vote was pivotal because Musk had suggested he would step down or spend more time with his other companies if he didn’t get greater control over the carmaker. Tesla shares fell as much as 4.8% as of 9:40 a.m. Friday in New York amid a broader market selloff. The stock was up 10% this year through Thursday, trailing the 14% advance in the S&P 500 Index.

Musk, who has led the EV maker since 2008, did caution as he has in the past that Tesla will be constrained by the supply chains it relies on to produce complex products. To that end, he said the company might end up building a chip factory to supplement the semiconductors it’s ordered from established manufacturers including Samsung Electronics Co. and Taiwan Semiconductor Manufacturing Co.

“Even when we extrapolate the best-case scenario for chip production from our suppliers, it’s still not enough,” the CEO said. “So I think we may have to do a Tesla terafab. It’s like giga, but way bigger.”

Musk expects three products to start production next year: Optimus, the long-delayed Semi truck and the steering wheel-less Cybercab. He anticipates that output of the latter product should roughly match the rate of regulatory approval. “I’d like to thank Waymo for paving the path here,” Musk said. “It’s very helpful.”

Aggressive Effort

The compensation package was widely expectedto overcome opposition from some prominent investors, including Norway’s Norges Bank Investment Management, Tesla’s ninth-largest holder. Proxy advisers Institutional Shareholder Services and Glass Lewis recommended investors reject the payout, citing concerns with its magnitude and its potential to dilute other shareholders’ ownership.

Tesla’s board went all-out to garner support, meeting with major institutional shareholders and arranging a series of media appearances. In interviews with Bloomberg News, Chair Robyn Denholm cast the vote as crucial to Tesla’s future, which needs an engagedMusk to achieve its goals.

Musk himself vouched for the proposal, saying during Tesla’s recent earnings call that he wasn’t comfortable building a “robot army” unless he owns a quarter of the company.

The pay deal gives Musk a clear, albeit challenging, path to becoming the world’s first trillionaire. Should he hit all of the targets in the plan, including expanding Tesla’s market value to $8.5 trillion, his total stake in the carmaker would be worth roughly $2.4 trillion.

That’s more than five times his current net worth of about $460 billion, according to the Bloomberg Billionaires Index. His net worth would exceed the current gross domestic product of all but seven countries.

“There are significant hurdles” to unlocking the payout, including profitably scaling Tesla’s operations and delivering many robots and robotaxis, Wedbush Securities analyst Dan Ivessaid. “Now it’s about driving the most important chapter in Tesla’s history with an autonomous future ahead.”

Up-and-Down Fortune

Musk’s fortune has been on a roller coaster ride this year. It stood at roughly $450 billion in January, when he joined President Donald Trump at his inauguration, but began a rapid decline as the CEO’s politics — including a prominent role at the Department of Government Efficiency — alienated many consumers. A feud between the two later sent Tesla shares plummeting.

Musk and US President Donald Trump

Photographer: Samuel Corum/Sipa/Bloomberg

His wealth has rebounded since then, helped by a recovery in Tesla shares as well as booming valuations for his closely held businesses including xAI and SpaceX.

The new package drew pushback from some longtime Musk critics, including New York State Comptroller Thomas DiNapoli, who called the compensation “pay for unchecked power, not pay for performance.” Vermont Senator Bernie Sanders blasted the plan as “totally absurd.”

“People can’t afford their rent, can’t afford health, can’t afford groceries, they can’t afford to retire with dignity,” Sanders told reporters. “And we’re talking about one guy who already owns more wealth in the bottom 52% of American households getting even richer.”

Musk’s previous multibillion-dollar compensation plan was struck down by a Delaware judge last year. The company is appealing the ruling and has moved its incorporation to Texas, partly in response to the decision. In August, Tesla’s board also granted Musk an interim award, worth around $30 billion at the time, to partially replace the payment.

xAI Verdict

Whereas Tesla shareholders were with the board on Musk’s pay, they were equivocal about another matter: authorizing an investment in the CEO’s artificial intelligence venture xAI.

Although Tesla received more votes in favor of the prospect than against, there were “a significant number” of abstentions, Ehrhart said. Since this was an advisory proposal, the board will consider next steps in light of the level of shareholder support.

The proposal was for an investment “in an amount and form deemed appropriate by the board,” and was not binding, meaning Tesla wasn’t required to move ahead with an investment. Musk has been publicly supportive of the idea, floating the prospect of a $5 billion infusion last year.

(Updates with share trading in eighth paragraph.)

--With assistance from Craig Trudell, Kurt Wagner, Ed Ludlow and Erik Wasson.

To contact the reporters on this story:
Kara Carlson in Austin at kcarlson72@bloomberg.net;
Dana Hull in San Francisco at dhull12@bloomberg.net;
Tom Maloney in New York at tmaloney38@bloomberg.net

To contact the editors responsible for this story:
Richard Clough at rclough9@bloomberg.net

Lindsay Blakely

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