Musk's $1 Trillion Pay Package: Tesla's Gamble on Retention

Tesla's shareholders are set to approve a $1 trillion, 10-year pay package for CEO Elon Musk. Designed to retain Musk and transform Tesla into an AI and robotics leader, the package faces scrutiny over its size and implications on corporate governance. Support is expected despite potential legal challenges.

Tesla shareholders are expected to approve CEO Elon Musk's staggering $1 trillion, 10-year compensation plan during the company's annual meeting in November. This audacious package aims to retain Musk, alleviate concerns about Tesla's future, and reward him with millions of shares if ambitious earnings and valuation targets are met.

Elaborate negotiations, beginning in February, forged this plan. Musk's demands included key strategic control and a stake of 25% in Tesla. Threats to leave by Musk loomed large, potentially impacting Tesla's AI talent pool. The agreement includes payback for a nullified $56 billion plan from 2018, offering Musk restricted shares repayable over several years.

While the pay package faces legal challenges, industry experts predict shareholder backing. Prominent investors such as Vanguard and BlackRock, who previously supported substantial pay plans for Musk, are yet to reveal their stance. Voices of critique emerge, labeling the package as excessive and questioning its impact on Tesla's long-term R&D and market position.

(With inputs from agencies.)