Tesla shareholders have re-approved CEO Elon Musk’s contentious $56 billion pay package, signalling support for his leadership despite ongoing challenges for the electric car giant.
The decision was made at Tesla’s annual general meeting on Thursday, where backers emphasised the necessity of the 2018 compensation plan to keep Musk focused on the company.
“This endorsement from our shareholders reflects their confidence in Elon Musk’s vision and leadership,” said a Tesla spokesperson. The approval came as Tesla’s stock saw a 3% increase, though it remains down 27% for the year.
Despite the vote of confidence, Musk faces a legal battle after a Delaware judge invalidated the pay package in January. Musk had previously announced the shareholder approval on his social media platform X, which helped boost Tesla’s stock ahead of the meeting.
Tesla’s shares have struggled, dropping 27% this year and cutting its market value by more than half to $582 billion from its peak in November 2021. This decline comes amidst fierce competition from Chinese EV makers like BYD, offering more affordable vehicles.
In April, Musk announced that Tesla would launch more affordable models in 2025, temporarily lifting investor spirits. However, the company’s quarterly revenue fell for the first time since 2020, further compounding its challenges.
Meanwhile, other tech giants have thrived in 2024. Amazon and Alphabet have each seen over 20% gains, Meta Platforms surged more than 40%, and Nvidia nearly tripled. Tesla’s market value has also been surpassed by Eli Lilly and Broadcom.
Analysts have tempered their expectations for Tesla, with the average price target dropping to $181 from $226 at the beginning of 2024, closely aligning with Thursday’s closing price of $182.47.
Musk has urged investors to view Tesla as an “AI robotics company” rather than just a car manufacturer. Despite this rebranding, Tesla’s stock trades at 61 times expected earnings, a significant drop from its peak but still much higher than traditional automakers. For comparison, General Motors and Ford trade at multiples of 5 and 6, respectively.
Tesla’s market value per employee stands at nearly $6 million, dwarfing the $300,000 per employee seen at GM and Ford. This high valuation underscores the market’s continued confidence in Tesla’s future potential.
Even with its recent struggles, Tesla remains the world’s most valuable automaker, far outstripping Toyota, which holds a market value of about $270 billion. In 2020, Tesla’s soaring stock made it more valuable than Toyota, Volkswagen, Hyundai, GM, Ford, and BMW combined. Although Tesla’s value has since dipped, it continues to lead the automotive industry in market capitalisation.
Read more on Tesla CEO axes executives in cost-cutting move
