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Tesla stockholders approve Elon Musk compensation

21 March 2018

"Instead, Elon's only compensation will be a 100% at-risk performance award, which ensures that he will be compensated only if Tesla and all of our stockholders do extraordinarily well". The company also makes two luxury electric models, the Model S sedan and Model X crossover.

For each of 12 milestones Tesla achieves, Musk, who already owns more than 20 percent of the company, will get stock worth 1 percent of Tesla. The vote is seen as a test of whether big investors are prepared to support such a large payout at the founder-led company.

Tesla shareholders voted Wednesday to approve a massive $2.6 billion compensation package for CEO Elon Musk despite opposition from two of the company's prominent proxy advisory firms, according to multiple reports.

"Elon will receive no guaranteed compensation of any kind - no salary, no cash bonuses, and no equity that vests by the passage of time", the company said of the new pay plan in January.

Large shareholders including Baillie Gifford & Co. and T. Rowe Price Group Inc. signaled ahead of the vote that they would probably support the package.

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In 2016, Musk said he was working so hard, he kept a sleeping bag in a conference room adjacent to Tesla's production line in Fremont. He could realize gains from those only if Tesla met certain product development milestones and drastically increased its market value, and it has: Tesla celebrated delivery of its 250,000th vehicle in the third quarter.

CNBC notes that Musk could ultimately earn more than $55 billion if Tesla's market cap experiences a 12-fold jump from its current level of around $52 billion. Musk will collect additional stock grants if the company increases its market capitalization.

The firm is now valued at about $52.46 billion. Earlier, Tesla spokesperson had also denied the talks.

If Musk were to leave, it would be a huge blow, the company has repeatedly told investors in regulatory filings. Several top executives have left the company lately, calling into question what Tesla would do if Musk made a decision to do something else.

"We believe as a board and executive team that we can actually achieve these milestones", said board member Antonio Gracias, who points out that under a 2012 incentive package, Musk raised Tesla's market capitalization by 17 times to more than $50 billion past year. The company is required by California state law to pay him a minimum-wage salary that adds up to roughly $37,000 per year, but Musk has never accepted it.

Tesla stockholders approve Elon Musk compensation