Shareholders in Tesla gather today to decide whether to approve a proposed $1 trillion package for chief executive Elon Musk. Given their history, they might just be crazy enough to do so.
Certainly chairwoman Robyn Denholm is banging the drum for a deal her board has put together that would see Musk receive a new package of stock options that could be worth up to $1 trillion (€870 billion) over the next decade if he meets some fairly ambitious targets, bringing his stake in the business to 25 per cent.
The numbers are mind-boggling, even in an age when executive compensation has entirely lost the run of itself and the pay gap between the C-suite and the shop floor continues to widen.
Denholm notes that Musk has threatened to walk out if shareholders vote down the package.
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The only possible justification for a package anything close to what is being proposed is that Musk can deliver undreamed of growth for investors in the business. But can he?
Tesla’s numbers do not scream “irreplaceable chief executive”. Shipments from its Chinese factory were down in eight of the 10 months this year.
Meanwhile sales and registrations in markets across Europe are tanking. Sales in the UK halved year on year in figures published this week.
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Registrations are down 89 per cent in Sweden, 86 per cent in Denmark, 50 per cent in the Netherlands and 31 per cent in Spain. In Ireland, while they are up 0.37 per cent so far this year, that is against a 3.3 per cent rise in overall car registrations and a 38 per cent surge for electric vehicles in the market.
Over the first nine months of the year, Tesla sales are down 28.5 per cent across Europe versus the same period last year.
Posting on X ahead of the vote, Musk wrote: “Tesla is worth more than all other automotive companies combined. Which of those CEOs would you like to run Tesla?”
BYD’s Stella Li is one who comes to mind, however unlikely. The Chinese brand is beating Tesla hands down in markets across Europe and Asia.
Musk is also running several other companies, including social media platform X, where he is a prolific tweeter.
If Musk were to walk, and the shares were to tank as Denholm predicts, the man who owns 16 per cent of the business would be hurting himself more than anyone.
It might be time for Tesla shareholders to take that chance.
