SAN FRANCISCO, United States (Reuters) – Tesla shareholders will decide this Thursday whether the electric car maker will pay US$878 billion to Chief Executive Elon Musk, the highest compensation ever given to an executive in history.
But the vote is just one of several proposals that could reshape Tesla’s future, from the power of its board of directors to the question of whether the automaker should invest in Musk’s artificial intelligence company, xAI.
The automaker’s shareholder meeting takes place this afternoon, at the company’s factory in Austin, Texas.
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Approval of the payment will mark a vote of confidence in Musk’s leadership and his vision of transforming the automaker into an artificial intelligence and robotics company.
See the main proposals to be discussed at Tesla’s shareholder meeting:
UP TO $878 BILLION FOR MUSK
Musk’s proposed compensation package requires Tesla to reach a series of operational and profit milestones, such as selling 20 million vehicles over the next 10 years and operating 1 million self-driving cars. At the same time, Tesla shares are expected to appreciate to new heights. The company, which is currently worth more than US$1.5 trillion, will have to reach levels that start at US$2 trillion and go up to US$8.5 trillion.
Approval is widely expected, since Musk, who owns around 15% of Tesla, is allowed to vote on matters that he himself is interested in. The billionaire could not exercise voting power on salary issues when the company was incorporated in Delaware, but with the transfer to Texas this became possible. The executive’s defenders say that Musk’s goals are highly ambitious and that investors will benefit if the company reaches the milestones that will trigger record payments to the billionaire.
However, some prominent investors, including Norway’s sovereign wealth fund and other proxy advisers, oppose the proposal, calling it excessive. Tesla management had said that Musk could leave the company if the payment was not approved.
Musk has a previous compensation package that is being discussed in Delaware court. Investors will also vote on a proposal that would allow Musk to receive a replacement payment if the court rejects the old plan.
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INVESTMENT IN xAI
Investors will also consider a proposal for Tesla to invest in Musk’s artificial intelligence startup, xAI. Musk has said publicly that he believes Tesla should support the company.
The board did not endorse the plan. Investors will have to decide whether this association will advance Tesla’s AI ambitions or deepen potential conflicts of interest as the lines between Musk’s companies blur.
SUPER MAJORITY VOTING
Shareholders are also being asked to eliminate Tesla’s supermajority voting requirement, replacing it with a simple majority standard.
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Tesla has made several unsuccessful attempts to eliminate the supermajority voting rule. Binding proposals to eliminate the requirement were presented to shareholders in 2019, 2021 and 2022, but did not reach the two-thirds of outstanding shares needed for approval.
Some investors fear that relaxing the limit could strengthen Musk’s influence over the company. The result will show how far shareholders are willing to go to overhaul Tesla’s corporate governance.
POLITICAL NEUTRALITY
Investors will also vote on a shareholder proposal that calls for Tesla to adopt a formal policy of political neutrality.
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The measure will prevent the company and its leaders from engaging in partisan activities and will assign oversight to a committee of the board of directors. Tesla officials oppose the plan, saying existing policies already ensure adequate disclosure and accountability.
The proposal serves as a test of investors’ confidence in Musk’s outspoken public persona and the reputational risks that can come with it. Musk strongly embraced the government of United States President Donald Trump, which upset some of the brand’s customers.
