Hey, everybody. Welcome back to the Elon Musk Podcast. This is a show where we discuss the critical crossroads, the Shape, SpaceX, Tesla X, The Boring Company, and Neurolink. I'm your host, Will Walden. Tesla shareholders have approved a $29 billion stock grant for Elon Musk, reviving a massive pay package that a Delaware court had voided earlier this year.
This vote gives Musk the green light to claim one of the largest compensation deals in corporate history, but it also raises new questions about the control of the shareholders and executive oversight for Elon Musk. The approved deal allows Musk to access 303,000,000 stock options, which had originally been valued at around $56 billion when first agreed upon in 2018.
A Delaware judge struck down the plan in January, calling it an unfathomable sum and ruling the Tesla's board had not negotiated the package fairly. Now, the board has now reapproved the same terms after a June shareholder meeting that Tesla said reaffirmed investors support for Musk's leadership and the future of the company. Now, Tesla made the package contingent on hitting certain performance goals, though Musk
has already met those. These include Tesla reaching a $650 billion market valuation and achieving specific revenue and profit benchmarks. And while the company has seen its market cap drop below the level in recent months, the targets had already been achieved prior to the legal ruling that nullify the award. Now, Tesla argue that this made Musk eligible to receive the options regardless of the
stock's current trading value. Tesla relocated its legal home from Delaware to Texas following the January ruling. They were done with it. The move came after the Delaware Chancery Court's decision blocked the original compensation agreement. Tesla used the transition to push for a shareholder vote under Texas corporate law, which lacks some of the stricter legal standards found in Delaware, and the vote passed by a huge margin, according to the
company. Tesla has framed the approval as necessary to retain Musk, who has increasingly divided his attention across several companies, SpaceX, XAIX, and Neurolink, etcetera. And the board and Musk himself have claimed that failure to approve the package could cause him to disengage from Tesla or even shift its AI and robotics projects to one of his other ventures. So he's kind of holding them hostage.
If he doesn't get his money, he's going to leave or take some of his technologies someplace else. Is that the right thing for somebody like Elon Musk to do? Let me know in the comments of whatever platform you're on right now. It's an interesting thing to think about. Is he able to do this? Is he allowed to do this? I want to hear what you say.
Let's talk about this now. Some of these shareholders argue that Musk's ongoing involvement is essential to Tesla's future product pipeline, particularly full self driving and optimists. Tesla didn't provide updated financial details or accounting for the new approval, but analysts estimate the package's current value at around $29 billion due to the stocks lower trading price. And if exercised, the options would grant Musk a roughly 20% stake in Tesla, further
consolidating his control. Also, Musk also already owns around 13% of the company, even after selling billions of dollars worth of stock to fund his $44 billion acquisition of Twitter. Now, there's a thing with the institutional investors here. Norge's bank and California's public employee retirement system, They oppose this deal. They're part of the shareholders. They cited governance concerns and warned that the plan gives Musk too much unchecked authority.
So smaller shareholders argued that Musk's pay package creates A distorted incentive structure that could lead Tesla to prioritize high risk growth targets over sustainable long term positioning and planning. Tesla's retail show holder base, which includes many vocal Trump supporters and Musk supporters, played a major role in swinging the vote in his favor. The legal situation remains unresolved.
Chancellor Kathleen McCormick of the Delaware Court of Chancery, who originally voided the package, has not yet ruled on whether Tesla's Texas vote overrides her decision. The challenge is likely, especially since the case effects how companies can retroactively approve executive compensation, and Musk has not indicated whether he will exercise the stock options immediately or wait. But his voting power in Tesla is now set to increase regardless.
The board has maintained that the 2018 plan was based entirely on performance and required Musk to deliver concrete results before gaining any compensation. The company claims that the approval shows that shareholders remain aligned with Musk's aggressive goals for expansion in autonomous driving, battery storage, and AI. However, several watchdog groups argue that Tesla's board structure remains too close to Musk to provide independent oversight.
Now, some people will argue that the structure of Musk's deal continues to set a dangerous precedent for executive compensation, say it could influence other public companies to approve similar huge payouts that reward already wealthy executives with massive stock windfalls. A Musk's original 2018 package had no salary or cash bonuses, only stock options that vested upon hitting very high growth targets. The new approval does not change that structure, but cements its results.
And Musk has not committed to dedicating full time focus on Tesla, though he's still at SpaceX. And that's even after security vote. SpaceX, XAI, they all continue to expand and overlapping sectors. XAI recently raised $6 billion and lost a chatbot that directly competes with ChatGPT in factor.
Investors will now watch whether Musk prioritizes Tesla's AI over his other interests like XAI and SpaceX, given that much of Tesla's value is tied to expectations on full self driving, autonomy for driving, and also cyber cab and the robots too. Hey, thank you so much for listening today. I really do appreciate your
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