Tesla Shareholders Award Elon Musk $1 Trillion Compensation Package

What Happened?

Tesla shareholders voted to award CEO Elon Musk a new compensation package that could be worth one trillion dollars if all the sales and growth milestones are hit. Seventy-five percent of the voting shareholders cast ballots in favor of the new pay package. 

Most of the trillion-dollar value would come from Tesla stock options, which would be awarded to Mr. Musk if certain sales targets for Tesla are hit. For those milestones to be met, Tesla would need to achieve a total market value of over $8 trillio, a significant increase from its current market cap of roughly $1.4 trillion. 

Why it Matters

If Tesla achieved all the milestones required for Mr. Musk to receive the full amount of potential stock awards in his compensation deal, he could become the world’s first trillionaire. Mr. Musk responded to the shareholder vote by promising to expand both the quality and quantity of products available for sale by Tesla. 

In a statement, Mr. Musk called for ‘massively increasing vehicle production and ramping up Optimus production faster than anything’s ever been ramped up before in human history.’ Optimus is the new humanoid robot manufactured by Tesla. A report released by Morgan Stanley on Friday predicted Apple could potentially earn $133 billion a year from Optimus robots by 2040. Foxconn is also reported to be deploying them at its Nvidia factory in Texas.

Combining humanoid robots with artificial intelligence systems could create a new type of workforce capable of performing many of the same tasks human workers can. Current humanoid robots are limited by the need for constant connectivity and external instructions, but AI systems could create a new type of robot that can function autonomously for long periods of time. Millions of those types of robots could run factories, do construction work, repair infrastructure, or even carry out military operations.

Mr. Musk claims not only can robots achieve parity with human workers, but they can surpass human performance in terms of strength, endurance, and dexterity. If those claims are true, it could lead to a robot economy, which raises questions about what will happen to the human labor force. While conventional wisdom suggests robots could replace humans, there is also the potential for humans and robots to work together in a new integrated economy.

Tesla’s record-setting pay package for Elon Musk also raises questions about pay parity for CEOs and workers, since the current gap between them has grown wider than any time since the Gilded Age at the end of the nineteenth century.  

How it Affects You

For Mr. Musk to become the world’s first trillionaire, a robotics and AI revolution would have to take place, and one that is fueled by Tesla products and services. While AI and robotics have made strides in the past several years, both are still a long way from being capable of delivering on his promises.