Musk's quest for pay has made significant progress.
Early on June 14th, Beijing time, at Tesla's 2024 shareholder meeting, Musk's stock-based incentive plan, currently worth about $56 billion, was voted in favor by shareholders. He is expected to use this as grounds to appeal to the Delaware court - the latter rejected this bloated pay plan in early this year for 'lack of fairness.'
The plan was passed in 2018 when Tesla's electric car business was still struggling. Today, the best-selling Model Y in the world has not yet been released, and the Model 3 can only produce less than 1,000 vehicles per month. One of Musk's key goals at the time was to increase Tesla's market cap by ten times.
In addition to stock price, this plan also evaluates Tesla's corresponding revenue and profit performance targets in addition to stocks. If all targets are met, Musk will be able to buy over 20.26 million shares of Tesla stock based on the January 19, 2018 share price. This will help him further gain control of Tesla and bring about $56 billion in economic benefits.
Before the shareholders' meeting, Musk announced the voting results in advance on his personal social media account. | X
This is the largest executive compensation plan in US history. In comparison, Huang Renxun, the head of the currently-most popular Nvidia among the 'seven giants' of US stocks, received about $ 500 million in stock-based incentives in 2023. Musk's income is more than 100 times higher than that of Leather Garment Master.
The change in stock price is highly consistent with the votes of existing shareholders. As of the close of US stocks on June 13th, Tesla rose by 2.92% in a single day.
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The key is to keep Musk at Tesla.
The starting point for this round of voting came from a lawsuit as early as 2018. At that time, Richard Tornetta, who only held 9 shares of Tesla stock, accused Musk of misleading shareholders through the board of directors, causing shareholders to approve the bloated compensation plan - 73% of shareholders supported Musk's stock-based incentive plan at the time.
In terms of results, Musk did help Tesla achieve all the goals set six years ago. Since 2018, Tesla's compound growth rate has reached 37%, and its stock price has once exceeded trillion, higher than the sum of other major car companies.
In fact, opponents are not completely opposing Musk's receipt of this huge sum for the purpose of 'hating the wealthy.' The deeper discussion is about concerns over Tesla's internal management structure. Opponents pointed out that the six Tesla board members who approved the compensation plan in 2018 were very close to Musk privately, which resulted in a lack of sufficient internal checks and balances within the board.
But even if he leaves the board of directors, Musk is very good at mobilizing the masses because he always has a large number of supporters among investors. Currently, retail investors own approximately 30% of Tesla's shares, which is a very high proportion for a large company. Generally, retail investors cannot directly participate in shareholder meetings, so Tesla used the power of social media and offered attractive conditions to invite lucky voters to participate in the factory.
For supporters, their goal is not just to let Musk get a huge sum of money. Compared with fairness and huge bank balances, investors are more concerned about whether Musk will continue to control Tesla.
In April, Reuters reported rumors that Tesla had canceled the low-priced Model 2. Tesla's stock price experienced a downturn; after that, due to declining global sales leading to layoffs and production cuts, the stock price fell again.
Faced with the challenges, Musk's past magic can still be effective. He first positively debunked the rumor about the cancellation of Model 2 on Twitter and announced the launch of Robotaxi, an unmanned rental car, on August 8th; then he visited China by lightning at the end of April, leaving behind a vision of FSD's entry into China. Even if the products are not yet available, the share price has risen again. That's how Musk stops the fall in shares.
So, investors may care more about Elon Musk's departure than Tesla's business performance, which seems more likely to affect whether their stocks can further appreciate. In January of this year, when a Delaware judge dismissed the compensation plan, Musk expressed on his personal social media account that he was "unhappy" that he did not get 25% of the voting rights in Tesla and hinted that he might create new artificial intelligence products outside of Tesla.
Tesla does not use the same weighted voting right management mechanism as most companies, so Musk's words can also be understood as: my shareholding is too small. In 2022, in order to acquire Twitter, he also sold 8% of Tesla's shares to raise funds. Therefore, for either wealth or power reasons, he does need to get more than 20 million shares (about 9% of Tesla's current equity) corresponding to the stock-based incentive to gain more control.
The words of famous Silicon Valley investor and CEO of Ark Invest, referred to as 'Muddy Waters', represent the views of most investors: self-driving is crucial to Tesla's future, and the key is to let Musk personally take the helm.
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Will self-driving be postponed again this time?
At the shareholder meeting early this morning, in addition to announcing its performance and voting results, Musk, as always, demonstrated Tesla's plan as an artificial intelligence company for the future.
Firstly, Musk announced three new models that will be launched soon. Judging from the previous information, it probably includes the Robotaxi, which will be unveiled on August 8, and the Model 2 with a price of about $25,000. The third model looks like an MPV for family users- if so, I don't know if this is a model launched by Tesla for the Chinese market.
Secondly, Musk announced the progress of humanoid robots. He has emphasized many times before that the potential of humanoid robots will far exceed that of the automobile business. At this shareholder meeting, Musk announced that the cost of Tesla humanoid robots is currently controlled at around $10,000, and the price is expected to be $20,000, which are two more realistic numbers. Musk also stated that the target output of humanoid robots in the future is 1 billion units per year, and it is not known when this number will be reached- according to the plan, there will be only about 1,000 humanoid robots entering Tesla factory work next year.
Thirdly, the most important thing is the latest progress on Robotaxi. Musk stated that Tesla will launch a new vehicle sharing plan, similar to Uber and Airbnb. In other words, Tesla owners can make their cars earn money during non-use time by joining Tesla's self-operated fleet- all of which can be realized in real-time operation on the Tesla app. Tesla will participate in revenue sharing in the form of travel platform. According to Musk, in the future, only one OTA upgrade will be required to upgrade the existing FSD (actually L2-level assisted driving) to L4-level autonomous driving. The weekly income generated by Robotaxi can exceed the actual cost of using the car.
Currently, among all intelligent driving/autonomous driving companies in the world, Tesla has the best data and computing power resources. However, since setting the goal of autonomous driving in 2019, this goal has been postponed for 5 consecutive years. Recently, media reports that Musk is transferring some high-performance chips from Tesla to xAI and X (Twitter), which has also caused market concerns about the priority of autonomous driving training.
This time, Musk has again painted a picture for autonomous driving. We have been waiting in one futures after another. What kind of Robotaxi will Tesla bring on August 8th?
No one in Silicon Valley doubts that AI will bring higher-level intelligent driving, but when it comes to commercialization, even Musk and Tesla, who are so strong, have never given an accurate answer. Recently, there were reports that Musk is transferring some high-performance chips from Tesla to xAI and X (Twitter) , which caused market concerns about the priority of autonomous driving training.
This time, Musk has again painted a picture for autonomous driving. We have been waiting in one futures after another. What kind of Robotaxi will Tesla bring on August 8th?
Editor/new