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Elon Musk is putting his money where his mouth is. In a securities filing on Friday, Tesla disclosed a new stock award for its CEO worth as much as $1 trillion. It hinges entirely on Musk’s ambitious claims that his focus on humanoid robots and robotaxis will turn Tesla into “the most valuable company in the world by far,” as he has often said. It’s not crazy to imagine Tesla passing everyone else, although it has some ways to go: Its current market capitalization of $1.1 trillion compares with market leader Nvidia’s value of $4 trillion.
Musk has also suggested Tesla might become as “valuable as the next five companies combined,” but that’s not a goal he seems willing to commit to. The top five companies are now worth $16.6 trillion. The new stock award doesn’t require him to get Tesla’s market cap that high. He just—just!—has to get Tesla to an $8.5 trillion market capitalization within a decade to have a chance of collecting all the shares in the award. And what an award—he stands to get as many as 423.7 million shares, or 12% of Tesla’s share count, which is roughly equivalent to the stake he already owns (that’s excluding the shares granted him by the earlier big stock award from 2018 that is still being litigated). The shares in the latest award are worth $143 billion at Tesla’s current market price. Given the market cap goals Tesla has set, though, they’d be worth nearly eight times as much if he collected all of them.
Musk has to do much more than just lift Tesla’s stock price—he also has to meet operational milestones. These include earnings goals—at the very least, Tesla has to more than triple earnings from current levels—and product goals, such as delivering the 20 millionth Tesla. (Tesla so far has sold about eight millioncars). Other product goals include delivering a million robots, something Musk has said he can do within five years. There is an out, however: If something happens “outside of Tesla’s control” that hurts its ability to achieve most of the product goals—such as legislation restricting robotaxis—then Musk can meet the criteria for the award on the market capitalization goals alone. That seems like a significant qualifier, although Tesla’s stock price likely won’t rise too far if his robotaxi or robot ambitions fail. Find more details of the package here.
Given how closely Musk has tied his financial fortunes to Tesla’s performance, shareholders can’t complain too much. Still, the explanation for the award outlined in Friday’s filing makes clear how much he has cowed the board. For instance, he told directors deciding on his compensation that he had to have at least a 25% voting stake to remain at Tesla. (The new award gets him as high as 28.8%.) Musk also told the directors “he may pursue other interests that may afford him greater influence” if he doesn’t get what he wants from Tesla, the company said in today’s filing. Musk already has many other interests, most obviously at xAI and SpaceX! (For his next act, he said on Thursday that he’s planning on performing the biblical miracle of restoring sight to the blind next year—“limited” sight, at least.) Even so, the directors decided it was “critical for Tesla to secure Mr. Musk’s commitment and focus to lead Tesla.”
Having a Tesla board more willing to stand up to its CEO wouldn’t be a bad thing. Still, the situation could be worse. The good news for shareholders is that if Musk doesn’t achieve his ambitions, he won’t get paid.
The Information’s Stories of the Week
The big tech story of the week was a federal judge’s decision not to impose the most draconian requirements on Google to make up for its illegal search monopoly. You can read our detailed rundown here, our TITV special presentation here and The Briefing’s commentary here and here.
On the artificial intelligence front, we broke the news that Nvidia is doing business with another of the cloud startups it is backing, in this case Lambda. We also broke the news that Lambda is planning to go public. This could be another CoreWeave! On a related topic, we broke down how big tech is spreading the risk of its massive AI buildout, and we revealed how Google is trying to win more customers for its AI chips—pitting it more directly against Nvidia.
You might have noticed that Elon Musk doesn’t talk as much about his ambitions for a payment service at X. This story explains why.
Crypto stocks tumbled after we revealed that Nasdaq was tightening its scrutiny of companies turning themselves into crypto-holding operations.
Elsewhere, StubHub’s IPO is a couple of weeks away, but last Saturday, we broke the news that the ticketing business’s first-half revenue and profit fell short of projections it shared with lenders earlier this year.…OpenAI and xAI have discussed licensing Cursor’s coding data.…Staff at the Securities and Exchange Commission are using AI to identify rules and regulations for cutting.
GLP-1 drugs that help people lose weight have taken off in Silicon Valley, but many people are microdosing them, we reveal in this Weekend Big Read on the topic.
In Other News
• The European Commission fined Google $3.5 billion for what it called anticompetitive behavior in the advertising technology business and said it may mandate a sale of parts of the unit. Google’s ad tech business brokers the sale and purchase of ads across the web. The decision raises the likelihood that Google will have to spin off part of the ad tech unit, as a U.S. court has also ruled that the business is a monopoly.
• Meta Platforms plans to spend “something like at least $600 billion” through 2028 on data centers and other infrastructure in the U.S., Meta CEO Mark Zuckerberg said on Thursday at a dinner with President Donald Trump and other technology executives.
• OpenAI could spend $10 billion next year on the AI chip it is co-designing with Broadcom, according to a report in The Financial Times. The report indicated that mass production of OpenAI’s chip would begin next year.
• Anthropic agreed to pay $1.5 billion to settle a copyright infringement lawsuit filed by a group of authors.
Today in The Information’s TITV
Check out today’s episode of TITV in which we talk about what the past few weeks’ earnings tell us about the AI versus enterprise software debate.
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