Shareholders of EV maker Tesla (TSLA) are being asked to vote on a massive compensation plan for CEO Elon Musk that could reach nearly $1 trillion. Notably, in a letter to investors, Board Chair Robyn Denholm warned that if Musk were to walk away, Tesla could lose significant value, since many investors see his leadership as key to the company’s future. Nevertheless, the pay plan has led to a lot of pushback. For instance, proxy advisory firm Institutional Shareholder Services recently called the payout “astronomical.”
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Moreover, a group of unions and watchdog organizations launched a campaign called “Take Back Tesla” in order to oppose the deal. In response, Musk fired back during a recent earnings call by calling these critics “corporate terrorists.” Meanwhile, Denholm responded on CNBC by saying that the company is at a crucial moment as it pushes deeper into artificial intelligence, and that Musk’s leadership is irreplaceable if Tesla wants to stay ahead. It’s worth noting that the proposal includes 12 levels of stock awards that begin when Tesla reaches a $2 trillion valuation and increase until the valuation reaches $8.5 trillion.
Along the way, Musk must help Tesla meet goals like producing 20 million vehicles, rolling out 1 million robotaxis, and reaching up to $400 billion in adjusted EBITDA. If all the targets are met, Musk’s ownership stake would grow from 13% to about 25%, which would give him more control over major decisions. Unsurprisingly, Denholm emphasized that this isn’t about the money for Musk and urged the company’s many retail investors to vote before the November 5 deadline.
What Is the Prediction for Tesla Stock?
Turning to Wall Street, analysts have a Hold consensus rating on TSLA stock based on 14 Buys, 11 Holds, and 10 Sells assigned in the past three months, as indicated by the graphic below. Furthermore, the average TSLA price target of $378.20 per share implies 17.3% downside risk.
