Elon Musk responded to Tesla Inc. shareholders approving his trillion-dollar compensation package by making a series of exaggerated predictions about the company's capabilities in the coming years. Tesla's humanoid robots will start with simple tasks such as handing out bags of candy and progress to performing surgical procedures with "superhuman" precision, the CEO said Thursday.
Musk said Tesla's weakening auto business, which is experiencing its second straight year of declining sales, aims to boost production by about 50% by the end of 2026.
The head of the Space Exploration Technology Company (SpaceX) even further predicted that Tesla’s robot named “Optimus” and its vehicles “will play an important role” in establishing bases on the moon and Mars in the future. "This would be a cool thing, a lunar rover or a Mars rover that's beyond what's currently available," he told one shareholder.
Musk, 54, needs to achieve at least some of these ambitious goals to lead Tesla to the market capitalization and operating milestones set by shareholders in a compensation agreement approved at the company's annual meeting. General Counsel Brandon Earhart said more than 75% of the vote was in favor of the package, prompting a standing ovation from the crowd at the Tesla factory in Austin.
The stock award paves the way for Musk, the world's richest man, to become the first trillionaire in history and boost his stake in Tesla to 25% or more over the next decade.
Musk said: "This is not only a new chapter for Tesla, but also a brand-new book. The core of this new book is to significantly increase vehicle production and expand the production capacity of 'Optimus Prime' at an unprecedented speed - there has never been such a rapid expansion of production capacity in human history."
The vote is crucial because Musk has previously hinted that he may resign or devote more time to other companies if he fails to gain greater control of the automaker. Tesla shares fell as much as 4.8% as of 9:40 a.m. (New York time) on Friday amid a broader market selloff. The stock was up 10% this year through Thursday, lagging the S&P 500's 14% gain.
Musk, who has run the electric carmaker since 2008, has warned as he has in the past that the supply chain Tesla relies on to make complex products will be a constraint for the company. To that end, he said the company may eventually build a chip factory to supplement the semiconductors it orders from established manufacturers such as Samsung Electronics and TSMC.
The CEO said: "Even if we extrapolate the best-case scenario of supplier chip production, the production is still not enough to meet demand. Therefore, I think we may have to build a 'Tesla super chip factory' (Tesla terafab). It will be like a 'giga' (giga), but much larger."
Musk expects three products to start production next year: the Optimus Prime robot, the long-delayed Semi truck, and the steering-wheel-less Cybercab. He expects production of the latter to be roughly in line with regulatory approval progress. "I want to thank Waymo (Google's self-driving company) for paving the way in this space, which has been a big help," Musk said.
Actively seek support
The market had previously expected that the compensation package would overcome opposition from some well-known investors, including Tesla's ninth largest shareholder, Norges Bank Investment Management. Proxy voting advisors Institutional Shareholder Services (ISS) and Glass Lewis had advised investors to reject the compensation package, citing concerns that it was too large and could dilute other shareholders' holdings.
Tesla’s board went all out to drum up support, meeting with key institutional shareholders and arranging a series of media appearances. In an interview with Bloomberg, Chairman Robin Denholm said that this vote is crucial to Tesla’s future and that the company needs Musk’s full commitment to achieve its goals.
Musk himself has endorsed the proposal, saying on Tesla's recent earnings call that he was unwilling to build a "robot army" unless he owned a quarter of the company.
The pay deal provides Musk with a clear, if challenging, path to becoming the world's first trillionaire. If he achieves all of the goals in his plan, including boosting Tesla's market value to $8.5 trillion, his total holdings in the automaker would be worth about $2.4 trillion.
That's more than five times his current net worth of about $460 billion, according to the Bloomberg Billionaires Index. The size of its net assets will exceed the current gross domestic product (GDP) of all but seven countries.
Dan Ives, an analyst at Wedbush Securities, said: "Receiving this compensation requires overcoming many significant obstacles, including achieving profitable expansion of Tesla's business and delivering a large number of robots and self-driving taxis. The key now is to promote the most important development stage in Tesla's history with the future prospects of autonomous driving."
Wealth fluctuates
Musk's wealth has experienced wild swings this year. He was worth about $450 billion when he attended the inauguration with President Donald Trump in January; but his fortune began to shrink rapidly as the CEO's politics, including a key role in government efficiency, alienated many consumers. Since then, his dispute with Trump has further caused Tesla’s stock price to plummet.
His fortune has since rebounded, helped by a recovery in Tesla's stock price and soaring valuations of its holdings, including xAI artificial intelligence company and SpaceX.
The new pay package was opposed by Musk's longtime critics, including New York State Comptroller Thomas DiNapoli, who called the pay "pay for unfettered power, not pay for performance." Vermont Senator Bernie Sanders slammed the plan as "completely ridiculous."
"People can't afford rent, they can't afford medical care, they can't afford groceries, they can't retire with dignity," Sanders told reporters. "And here we are talking about someone who already has more wealth than the bottom 52 percent of households in America combined, getting richer."
Musk's previous compensation plan, worth billions of dollars, was rejected by a Delaware judge last year. Tesla is appealing the ruling and has moved its corporate domicile to Texas, in part in response to the ruling. Tesla's board also awarded Musk an interim award in August, then worth about $30 billion, as a partial replacement for previously rejected compensation.
Voting results about xAI
While Tesla shareholders backed the board on Musk's compensation, they were ambiguous on another issue: authorizing investment in the CEO's artificial intelligence venture, xAI.
Earhart said that while Tesla received more votes in favor than against, a "significant number" of shareholders chose to abstain. As this is an advisory proposal, the Board will consider next steps based on the level of shareholder support.
The proposal allows the board to invest "in such amounts and in the form it deems appropriate" and is non-binding, meaning Tesla does not have to force the investment forward. Musk has publicly supported the idea, raising the possibility of a $5 billion capital injection last year.