Tesla Inc (NASDAQ:TSLA) is expected to receive strong backing from shareholders for CEO Elon Musk’s proposed $1 trillion compensation plan at the company’s annual meeting this Thursday, according to Wedbush analysts.
The firm reiterated its ‘Outperform’ rating and $600 price target, implying upside from its current share price of about $470, forecasting that the vote will pass easily.
“We expect Musk to get overwhelming shareholder approval on the potential $1 trillion pay package despite some opposition from various shareholders/ISS and send a loud and clear message to Elon being ‘wartime CEO’ during this most important chapter of growth in Tesla’s history as the AI Revolution is here,” Wedbush wrote in a note to clients.
The analysts noted that Tesla’s board is seeking approval for a new long-term incentive plan aimed at retaining and motivating Musk to stay in his leadership role.
The proposed structure mirrors the 2018 performance award but raises the bar significantly with new financial and operational milestones, including targets tied to the company’s robotics and autonomous vehicle initiatives. The proxy also includes a proposal related to artificial intelligence.
“The proxy also calls for shareholders to vote on a strategic investment in xAI to advance Tesla’s AI capabilities and improve product innovation and create one of the most powerful AI companies globally over the next 12 to 18 months,” Wedbush noted.
The new structure could increase Musk’s ownership stake significantly, Wedbush highlighted. “This new incentive driven pay package for Musk would also provide an additional 423 million shares of common stock (~12% of shares) which would increase his ownership of Tesla up to ~25% voting power which we believe was critical to keep Musk at the helm to lead Tesla through the most critical time in the company’s history,” the analysts wrote.
Wedbush added that the package reflects confidence in Musk’s leadership as Tesla expands further into artificial intelligence and robotics.
“We believe this was the smart move by the Board to lay out these incentives/pay package at this key time as the biggest asset for Tesla is Musk...and with the AI Revolution this is a crucial time for Tesla ahead with autonomous and robotics front and center,” the analysts wrote.
They believe that the shareholder approval would pave the way for the company’s next phase of growth. “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,” Wedbush concluded.