Tesla shareholders, meeting in Austin, Texas, where the electric vehicle manufacturer is headquartered, approved the resolution on CEO Elon Musk's new compensation plan with more than 75% of the vote , a group official announced.
This ten-year "compensation package" is made up of twelve tranches that set financial and operational thresholds that, if certain conditions are met, allow the group's shares to be awarded to the world's richest man. This way, Musk could earn over $1 trillion if he were to achieve these targets.
Shareholders were called upon to decide whether Musk's $1 trillion payout was appropriate or excessive. The future of the electric car giant was at stake: if the compensation approved and proposed by the board of directors failed to pass, the billionaire risked leaving the company. Musk had threatened to leave his creation if the proposal was rejected, effectively presenting shareholders with a choice: whether the risk of losing him as CEO outweighed the governance and social concerns of awarding the world's richest man what will now be the largest corporate salary in history .
Several shareholders had already revealed their voting intentions. The Norwegian sovereign wealth fund had already said it would vote "no," as had the largest American pension fund, Calpers. Charles Schwab, Morgan Stanley, and the Florida public pension fund, however, favored Musk's massive payout. Crucial to the outcome of the vote were Vanguard, BlackRock, and State Street, the three largest shareholders with 7.5%, 4%, and 3.4%, respectively. Tesla's board chairwoman, Robyn Denholm, had spent the past few weeks trying to persuade investors to vote in favor of Musk, warning them of an uncertain future should the billionaire step down.
This isn't the first time that Tesla's CEO's compensation has come under fire.
Last year, a Delaware judge struck down the $56 billion package Tesla had promised him if he achieved targets that seemed unattainable in 2018, when they were set. Musk had not only met them, but had significantly exceeded them.
