Is Musk's Big Payday Make-or-Break for Tesla's Share Price?
The Tesla (NASDAQ: TSLA) share price has risen ahead of the company's annual shareholder meeting on Thursday, 6 November. At the center of attention is CEO Elon Musk’s proposed pay package, potentially worth up to $1 trillion.
The key issue is not just whether Musk receives this compensation but concerns that he might leave if the deal is rejected. As Musk puts it,
"My fundamental concern … if I go ahead and build this enormous robot army, can I just be ousted at some point in the future?"
The package is primarily a stock-based award that depends on Musk achieving ambitious performance targets for Tesla over the next decade. If successful, Tesla’s market capitalization could soar to $8.5 trillion, more than five and a half times its current $1.5 trillion valuation.
Investor Reactions
- Some shareholders believe that a massive share price increase justifies the payout.
- Ark Invest CEO Cathie Wood supports the plan, having predicted a $2,600 Tesla share price by 2029, aligning closely with the market cap goal.
- Others oppose the deal, including Norway’s sovereign wealth fund, which owns 1.2% of Tesla, referred to here as a robotics developer.
The outcome of this vote could determine Musk’s future at Tesla and the company’s trajectory in the coming years.
Author's summary: Elon Musk's $1 trillion pay package hinges on ambitious Tesla growth targets, dividing investors on whether the potential rewards justify the risks.