Tesla Votes to Make Elon Musk the $1 Trillion Man

To quote Marcus Aurelius: The true worth of a man is to be measured by the objects he pursues.

Well, Elon Musk is pursuing a global fleet of humanoid robots, another fleet of autonomous robotaxis and some 20 million electric vehicles to be deployed within a decade. And for that, some 75% of Tesla shareholders, after a vote on Thursday, have decided he’s worth $1 trillion.

Who’s in the Driver’s Seat?

Not everyone was on board for the ultra-massive pay package. Proxy advisory firms ISS and Glass Lewis both recommended that shareholders vote against the payday, while Norway’s sovereign wealth fund, a top Tesla shareholder, said it would cast a “No” vote. Ditto the state retirement funds of California and New York. (Also in opposition? Pope Leo XIV.) On the pro side: Charles Schwab’s asset management arm, the State Board of Administration of Florida, as well as longtime Tesla bulls Wedbush Securities analyst Dan Ives and ARK Invest CEO Cathie Wood.

In a letter to shareholders earlier this week, Tesla chair Robyn Denholm made a simple argument for why the pay package was necessary: Without it, Musk could (or maybe would) leave Tesla, which would leave the company without a leader it will need if it ever wants to achieve its promise of sky-high growth. And Musk’s pay package, while exorbitant, is tied to making that promise a reality:

• Tesla stock, up nearly 18% year-to-date, is trading at a price-to-earnings ratio of almost 300. That’s way above the roughly 15x average of the rest of the US automotive industry, and above the 53x ratio of Nvidia, the Magnificent Seven company with the second-highest P/E ratio behind Tesla. 
• In other words, massive growth is inherent to Tesla’s valuation. For Musk to secure the whole bag, Tesla must, over the next decade, reach 20 million delivered EVs (up from around 9 million so far), 10 million active full-self driving subscriptions, 1 million robots and eventually, a market cap of $8.5 trillion, up from $1.54 trillion today.

Robot Takeover: Scoring the full reward would boost Musk’s 13% ownership stake of Tesla to 25%, while giving him more voting power over the company. In the company’s third-quarter earnings call in October, Musk emphasized his desire for more control: “If we build this robot army, do I have at least a strong influence over that robot army? I don’t feel comfortable building that robot army if I don’t have at least a strong influence.”