Cathie Wood on Elon Musk's $1 Trillion Compensation: Expected to Triumph Despite Resistance

Cathie Wood is optimistic that Elon Musk's proposed $1 trillion pay package for Tesla will smoothly pass an upcoming vote by the shareholders.

In a message on the platform X, ARK Invest's CEO and a staunch advocate of Tesla, Wood stated her belief that the compensation will succeed 'decisively,' even with influential proxy advisory groups and index funds opposing it, given their control over institutional investments.

Wood remarked on a previous victory, noting that when Musk’s 2018 pay plan was approved, Tesla was not listed in any indexes, yet the shareholders’ decision was clear-cut.

Currently, Tesla represents 2.4% of the S&P 500, which Wood argues is insufficient for index funds to have a significant effect on the vote. Thus, she remains confident in the approval of Musk’s new package.

The Bold Compensation Proposal

Tesla's latest compensation initiative, scheduled for a shareholder verdict on November 6, aims to make history as the largest of its kind.

The proposed deal would reward Musk with up to $1 trillion in stock if he reaches certain benchmarks, such as elevating Tesla's market valuation to $8.5 trillion and achieving 12 'performance objectives.'

These targets span from manufacturing 12 million vehicles and one million humanoid robots to deploying a fleet of a million robotaxis and increasing adjusted earnings from $16.6 billion in 2024 to $400 billion.

Tesla's board has issued a warning: a rejection from shareholders might lead Musk to reduce his engagement with the company or possibly even exit.

The Critics Weigh In

Nevertheless, the proposal has encountered criticism from proxy consulting firms like Institutional Shareholder Services (ISS), which have advised stakeholders to vote against it, pointing to its sheer magnitude and perceived lack of safeguards.

Wood countered these critiques, instead choosing to highlight the flaws in the system that magnifies such apprehensions.

In a further post, she questioned why institutional investors depend on proxy agencies for voting guidance, criticizing index-based investment strategies as a 'socialist' approach that does not conduct fundamental research and deeming the investment sector 'broken.'

Musk promptly supported her viewpoint on X, affirming with a simple "Absolutely."

Retail Investors Take the Stage

Wood's allegiance to Musk is well-known on Wall Street, consistently defending his pay as a deserved reward for innovation rather than extravagance.

Previously, she referred to the Delaware court's decision to nullify Musk's 2018 pay arrangement as 'unpatriotic' and has urged the appeals court to 'correct the error.'

Should the new plan be approved, Musk's ownership in Tesla could increase from 13% to close to 29%, significantly strengthening his influence on the company as it intensifies its pursuit of AI, robotics, and self-driving technology.

For Wood, the prophecy of success is resolute. She places her confidence in Musk's avid supporters to sway the vote in his favor once more, despite institutional pushback.

Wood has expressed her belief that retail investors will once again take center stage in the voting outcome, ending her post with a patriotic cheer: 'America!'