Elon Musk’s tenure at Tesla Inc (NASDAQ:TSLA)has never been short of drama, and the EV maker's annual meeting on Thursday looks set to deliver another dose.
Its board is asking investors to approve a new share-based award for the chief executive that could, in theory, be worth around $1 trillion.
Analysts expect shareholders to wave it through. But, as we saw on Tuesday, there is opposition, notably from Norway's sovereign wealth fund, a 1.14% holder, which is taking a recalcitrant stance.
And it's not alone. Proxy advisors Glass Lewis and ISS are urging rejection, saying the package is excessive and would dilute shareholder value.
Yet, the proposal is less about cash and more about control and forward momentum (the latter has been lacking at Tesla of late), followers of the Tesla story say.
If the plan passes, Musk would receive another 423 million shares, lifting his voting stake in Tesla to roughly 25%.
The incentive structure means he would only be paid if Tesla hits a series of demanding milestones, not unlike his 2018 award, though this one raises the bar further.
Wedbush’s analysts, led by Dan Ives, say the scheme is “a smart move” to keep Musk focused on what they describe as the most important chapter in Tesla’s history.
The group’s 'outperform' rating and $600 price target reflect that conviction. The investment bank believes retaining Musk as a “wartime CEO” is vital as Tesla pushes into artificial intelligence, robotics and autonomous driving.
The targets attached to the pay package are ambitious even by Musk’s standards. Tesla must deliver 20 million vehicles, reach 10 million subscriptions for its driver-assistance software, and put a million “robotaxis” and a million “Optimus” humanoid robots into commercial operation.
Financially, the company also needs to hit at least $50 billion of adjusted earnings before interest, tax, depreciation and amortisation.
Alongside the pay vote, shareholders will be asked to back a strategic investment in xAI, Musk’s artificial intelligence venture, designed to accelerate Tesla’s own AI capabilities and product innovation.
Wedbush argues the deal would help make Tesla one of the most powerful AI companies globally within the next year or so.
Tesla’s share price has already rebounded strongly this year, closing at $444.26 ahead of the meeting. The company’s market value stands at about $1.6 trillion, with Wedbush seeing scope for that to rise further if the new incentives spur progress in AI and automation.
For all the excitement, the risks are clear enough. Meeting those lofty production and software goals will require flawless execution at a time when electric vehicle demand looks more subdued and competition intensifies, especially in China.
Musk’s attention, spread thin between Tesla, SpaceX, xAI and X (formerly Twitter), remains another concern.
Still, for Wedbush, the calculation is simple: the biggest asset Tesla has is Musk himself.
Keeping him locked in, both financially and psychologically, may be expensive, but the analysts think it is worth it. Whether shareholders agree will be known soon enough.