Elon Musk’s $1 Trillion Pay Plan: The Case For Magical Thinking

Forbes

Big funds, advisory firms and the Pope opposed the exorbitant plan. Approval means shareholders think the polarizing, distracted CEO can top past successes with a risky AI-powered strategy.  Read the full story on Forbes: https://www.forbes.com/sites/alanohnsman/2025/11/05/elon-musks-1-trillion-pay-plan-the-case-for-magical-thinking/  Subscribe to FORBES: https://www.youtube.com/user/Forbes?sub_confirmation=1  Fuel your success with Forbes. Gain unlimited access to premium journalism, including breaking news, groundbreaking in-depth reported stories, daily digests and more. Plus, members get a front-row seat at members-only events with leading thinkers and doers, access to premium video that can help you get ahead, an ad-light experience, early access to select products including NFT drops and more:  https://account.forbes.com/membership/?utm_source=youtube&utm_medium=display&utm_campaign=growth_non-sub_paid_subscribe_ytdescript  Stay Connected Forbes newsletters: https://newsletters.editorial.forbes.com Forbes on Facebook: http://fb.com/forbes Forbes Video on Twitter: http://www.twitter.com/forbes Forbes Video on Instagram: http://instagram.com/forbes More From Forbes:  http://forbes.com  Forbes covers the intersection of entrepreneurship, wealth, technology, business and lifestyle with a focus on people and success.

Transcript

00:00Today on Forbes, Elon Musk's $1 trillion pay plan, the case for magical thinking.

00:07The only thing more outlandish than Elon Musk's demand for a $1 trillion pay package

00:13is the idea that Tesla's shareholders would grant it.

00:17And yet, that is how things played out, with everyone from massive investment funds

00:21to small individual investors approving compensation so vast, the new pope decried it.

00:27It's a bet that lightning will strike again for the most successful U.S. industrial

00:32entrepreneur of the 21st century, that Musk can overcome Tesla's falling electric vehicle

00:38sales and his tarnished image by pivoting to AI-powered robo-taxis and humanoid robots.

00:45With its stock already trading near an all-time high, at over 300 times projected earnings,

00:51many investors appear to think that's a foregone conclusion even before votes were tallied

00:56at Thursday's annual meeting.

00:58Brandon Earhart, Tesla's general counsel, told attendees that over 75% of shareholders approved

01:05the pay package.

01:07Gautam Mukunda, a professor with the Yale School of Management, said, quote,

01:12Tesla's current valuation only makes sense if you attribute magic powers to Elon Musk.

01:17If you break out the new business lines he's talking about, there's no particular reason

01:21to believe that Tesla is the leading company for self-driving cars.

01:25Waymo's technology is clearly better.

01:28The only evidence that Tesla is the leader in this technology is that Elon Musk says so.

01:33The vote Thursday came at a fraught time for the company that kick-started the modern EV industry,

01:39one that Musk also seems to be losing interest in.

01:43Tesla board chair Robin Denholm and CFO Vibe of Tanasia argued in recent weeks that retaining

01:49Musk with stock that would eventually give him at least a 25% stake in the company, up

01:54from about 13% currently, is necessary for its long-term growth and stability.

02:00Yet it comes as his focus on the company, key to his wealth, is increasingly distracted

02:04by five other businesses, particularly XAI, his artificial intelligence startup, which will

02:10also get a cash infusion from Tesla if shareholders approve.

02:13Ross Gerber, CEO of Gerber-Kawasaki Wealth and Investment Management, said,

02:19I like the direction of Tesla where it was.

02:23The direction he's chosen to move is a result of the fact that people won't buy his cars

02:27now.

02:29Gerber-Kawasaki manages about $4 billion, including at least $80 million of Tesla stock, and voted

02:35against Musk's compensation package.

02:38Gerber added,

02:38While Tesla reported a 7.4% jump in third-quarter EV sales, it was a sugar high, powered by the

02:51phasing out of a $7,500 federal tax credit.

02:55Even with that increase, the Austin-based company's EV sales are down about 6% so far

03:00this year, and expected to shrink about 7% in 2025, the second consecutive annual decline.

03:06In the US, Musk's high-profile support for President Donald Trump has undermined the

03:13Tesla brand's appeal in markets such as California, the biggest buyer of EVs in the

03:17country.

03:18Meanwhile, in Europe, his embrace of far-right politicians is linked to a double-digit percentage

03:23plunge for Tesla sales.

03:26China, which has been central to the company's profitability since 2020, is also a declining

03:31market for Tesla vehicles, as stronger, lower-cost local competitors, including BYD, Xiaomi,

03:38Xpeng, and NIO chip away at its market share there.

03:43Aside from restraining his behavior, Musk's focus should be on developing competitive new

03:47products to beat back global EV competitors and focusing on bright spots within Tesla's

03:52current operations, its growing battery business, and EV charging services.

03:57Gerber said, quote,

03:59I'm personally, and as a shareholder, unhappy that the company I invested in, because its

04:04main goal was sustainable transportation and energy to solve the climate crisis, has

04:09somehow been usurped into this useless goal of providing robo-taxi rides, something that

04:14already exists, and robots.

04:16I want my company back.

04:18Tesla could be the most impactful climate-related company in history.

04:22Instead, it's pivoting into garbage.

04:24Gerber, who for years was an outspoken Musk fan, was hardly alone in his opposition to

04:30the comp proposal for Musk.

04:32Norway's Sovereign Wealth Fund and public and union pensions voted against it.

04:37Proxy advisory firms Glass-Lewis and Institutional Shareholder Services didn't support it.

04:43And even Pope Leo has come out against it.

04:46The Holy Father, in an interview last month, linked Musk's pay plan to the broader social ills

04:51of extreme wealth gaps.

04:54For full coverage, check out Alan Owensman's piece on Forbes.com.

05:00This is Kieran Meadows from Forbes.

05:02Thanks for tuning in.

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