Tesla (NASDAQ:TSLA) stock is heading into a pivotal moment this Thursday, when the company holds its annual shareholder meeting, and this one comes with a huge figure attached.
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That would be CEO Elon Musk’s potential $1 trillion pay package, which shareholders are set to vote on. Despite some opposition from various shareholders and ISS (Institutional Shareholder Services), Wedbush’s Daniel Ives, an analyst ranked among the top 4% on Wall Street, expects Musk to get “overwhelming shareholder approval.”
Tesla’s board wants shareholders to approve a new long-term incentive plan for Musk, aimed at giving him enough motivation to steer Tesla toward its AI-driven future. Under the plan, Musk will receive compensation only if he delivers exceptional performance across key financial milestones. Designed to build on the controversial 2018 CEO performance award ($56 billion, rather paltry by the new standards), the new package sets an even tougher set of performance goals across several areas of the business.
A quick reminder of what Musk needs to achieve to unlock all that goodness: on the product side, Tesla would need to meet highly ambitious targets – delivering 20 million vehicles, reaching 10 million active FSD subscriptions, and deploying 1 million Optimus bots and 1 million Robotaxis into commercial service. The company would also need to hit “aggressive” adjusted EBITDA targets, starting at $50 billion and ultimately reaching $400 billion over four consecutive quarters, all while balancing heavy R&D spending and future product investments.
The proxy also proposes a shareholder vote on a strategic investment in xAI, aimed at strengthening Tesla’s AI capabilities, enhancing product innovation, and positioning it as “one of the most powerful AI companies globally over the next 12 to 18 months.” Additionally, the proposed plan includes the potential issuance of up to 423 million common shares (about 12% of total shares), which would raise Musk’s ownership stake to roughly 25% voting power. Ives thinks this was “critical to keep Musk at the helm to lead Tesla through the most critical time in the company’s history.”
Given that Musk remains the company’s most valuable asset, Ives thinks the incentives and the pay package represent a canny move by the Board, especially with the AI revolution underway, and the company advancing its efforts in autonomy and robotics.
“We expect shareholders to show overwhelming support for Musk and the xAI stake further turning Tesla into an AI juggernaut with the autonomous and robotics future on the horizon,” Ives summed up.
All told, the 5-star analyst assigns TSLA shares an Outperform (i.e., Buy) rating, alongside a $600 price target, implying the shares will climb 28% higher in the months ahead. (To watch Ives’ track record, click here)
The Street’s average target is a more downbeat $395.54, a figure that sits 15.5% below the current share price. On the rating front, Tesla claims a Hold (i.e., Neutral) consensus view, based on a mix of 14 Buys and 10 Holds and Sells, each. (See TSLA stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.