Musk Could Earn $1 Trillion With New Tesla Pay Package

22:08The short answer is yes. We're seeing the impacts. We're seeing the job growth slow. We're seeing unemployment tick up. But what we're seeing really is transformation in the workplace. You're seeing every job is changing and every company is going through the transformational stage, eliminating some of the rote work, but also investing in ways to increase effectiveness of their people. Sarah, much of the transition has to be led by human resources, but how much do you think the cuts come first and then the rehiring of different types of talent then comes, or are we seeing people just being asked to be more productive?

22:42So with HR, it's an opportunity to be very strategic, and layoffs are really more like a fad diet. There's something where you get an immediate hit into the P &L, but the real work, the healthy habits are not being implemented if you're not focusing on your workforce effectiveness and the habitual training that you have with all of your employees and the structures that you put in place. We're going through change. It's important to do this in a way that sets up companies for long-term success. And that's what HR departments are really focused on today when they're driving success with AI. Talk about that success with AI, Sarah, because that is something that has been questioned a lot in the last couple of weeks by this MIT report, people worrying that 95 % of pilots aren't delivering return on AI investment.

23:28What have you heard from the people that hire? Yeah, Caroline, it's so interesting because it's a headline that people have latched onto because there is fear. There's fear of what AI can do. And so when you can easily say this MIT report says that they're failing, that's easy to really embrace. But however, the reason, the nuance in the report is that it's AI alone, not really when you look at AI that's set up properly, AI that's integrated well with systems. And so what it tells us is that we need to responsibly bring AI in. You can't just set up AI and expect it to work. All of us that may buy an Alexa for our home, you can't just put it in your kitchen and expect it to dim the lights.

24:10You need to set it up, configure it, and understand how to use it. The same thing is true with AI. And so where AI is succeeding, it's when we have responsible practices, we have good integrations, and we have ethical usage of it.

24:25Caroline Hyde:So in your own survey and your own report, one of the things that struck me was the results around people's attitude towards maintaining work-life balance. it talks to a bigger picture debate whether AI helps us and makes life easier in our daily work lives so we can go and do more fun things outside of work. Is that really happening within the workplace or in any of the HR sectors that you're tracking? There's definitely generational differences in the embracing of AI between Gen Z, millennials. And what we're seeing, though, is that AI, whether it's freeing up time to have better work-life balance or to do more strategic work, I don't think any of us want to do robotic work.

25:05We want to be able to focus on what makes us human, our creativity, our ingenuity. And this is what's so powerful that AI is enabling us to do. One of the tropes that's going around at the moment is this 996 culture. Dare I even reference the lift heavy, run far, marry young, eat eggs and steak. But Sarah, more broadly, how much are you seeing this culture being adopted by those that want to grind, being shunned by those that have been in the workforce for a while? Again, getting back to there's a lot of fear. There's a fear that I'm not going to be relevant. There's a fear that my job may go away.

25:41And so a lot of this fear is driving the culture. And so what's most important right now is that everybody understands the urgency in scaling up themselves on AI and bringing AI skills into their workforce, not just the workforce of tomorrow, but the workforce of today. And so it's fear that drives this lack of balance. And what we need to do as leaders is really help people understand that AI can be here to help us. It can give us superpowers. and it can really be a great way to us to transform our businesses and get back to growth. Sarah Franklin, putting the realistic nature to the new work-life balance or lack thereof CEO of Lattice, we appreciate it.

26:23Meanwhile, coming up, well, Elon Musk, he doesn't seem to rest. Will he be the first trillionaire? More on the Tesla CEO's pay package proposal. That's next. This is Bloomberg Tech.

26:53Welcome back to Bloomberg Tech. Let's take a look at the broader markets. We do that from the lens of tech, though. NASDAQ 100, a volatile day. At one point, we saw that markets traded higher on the bad news being good news in terms of woeful jobs data means the Fed is going to cut. But now the market pushes lower. We're off by a tenth of a percent, maybe going to break back to the green. But volatile day, Ed, some key stocks to watch.

27:16Caroline Hyde:Great. Yeah, so our top story is that Tesla's board is proposing a$1 trillion compensation package for Elon Musk. I know that we don't normally do this, but the stock's up 3%. A one sigma or one standard deviation move for this stock is nearer to 5%. And it kind of feels like a little bit unremarkable, despite the fact that we're talking about a$1 trillion compensation package. And of course, the reality is that it's over 10 years and there's a lot in there to get through. So let's get to Bloomberg's Max Chafkin, one of the team behind Bloomberg's Elon Inc. podcast. And, you know, I've spent four hours reading a 300-page document and there's a lot in it.

27:57Caroline Hyde:But there are these milestones and targets that Musk and Tesla need to hit to get to$1 trillion, which jumped out at you off the page when you saw them? I mean, the thing I think is most significant is there are provisions in here about succession planning, about the idea that Elon Musk needs to come up with a way to, who's going to oversee this company beyond him, which I think is really important. And I think this trillion-dollar package reflects the fact that Tesla and Elon Musk are kind of inextricably linked, for better or worse. For worse being, of course, the political blowback that has come from Musk's association with Donald Trump and his centrality to many of the more unpopular policies pursued by the Trump administration.

28:41But also the idea, and many, many Tesla investors, as you know, Ed, see it this way, that Elon Musk has some kind of special ability to see the future. And that's what this is about, right? This is a long, long-term bet on that relationship while also acknowledging that at some time, at some point, hopefully for investors deep into the future, that relationship will come to an end. It's so interesting. Investors, of course, agreed to the previous$56 billion pay package. And the judge that has overruled that and put it on pause was like, it's unfathomably large, was part of her concern, as well as the board's role within it.

29:16This time, they've been very careful to try and make sure that the board seems independent. But they are giving Elon what he wants, which is 25 % of shares. Yeah, he's been out there for the last year and a half or so, essentially campaigning for a bigger stake in the company. And you might ask yourself, well, that's kind of strange. How does a CEO who, you know, there are many owners who are putting these stickers on their cars that say, I bought this before he went crazy. A CEO who has in some ways lost a part of his customer base, how is he asking for a massive pay raise? And I think the answer is, like I said, investors think this is a bet on the future.

29:52It's not necessarily about cars, it's about Optimus. It's about self-driving cars. It's about Tesla as this massive robotics company. Yes.

30:01Caroline Hyde:but tranche 11 and tranche 12 directly relate to musk's participation right in a succession plan just going back to all of that bloomberg's max chafkin for weeks will be going through this compensation proposal thank you very much there's another side to it and another story a lot of the momentum behind a shareholder resolution for tesla to potentially invest in xai came from retail investors. One of those that led the charge, lobbying others in recent months, is Alexandra Metz, aka Tesla Boomer Mama on X. Metz is a prominent figure in that group of retail investors who backed Tesla and Musk, a longtime Tesla investor and shareholder, and joins us now.

30:40Caroline Hyde:So it's included a shareholder-initiated proposal for Tesla to invest in XAI. Your reaction, please. Great. Very happy. Obviously, we have worked on that for a while now. It all started last year when another retail shareholder, Gali, asked Elon whether that is possible. At that point, obviously, XAI's valuation was much lower. Elon had then responded that he would ask the board. He came back a couple of quarters later saying this needs a shareholder vote. And then shareholders asked for a proposal to be included. And you'll get to vote in November. Alexandra, why is it important that you have skin in the game with XAI?

31:22what is the future as you see it? Because according to this pay package, it is still 20 million cars on the road. It is still FSD. Oh, it is still cars. It is still FSD. That is Tesla's bread and butter. But every Tesla now, and Ed knows because he drives one, already has Grok in the car. And Grok is the XAI product, the large language model that is used, derived from X, former Twitter communications and conversations, and the strongest, in my view, large language model there is.

32:02Caroline Hyde:Alexandra, I did use FSD on the way to work this morning. I only used Grok during the journey. The skeptic would say XAI is burning through cash. It is a company facing massive rivalry with OpenAI and Anthropic. It can't stand on its own two feet. This would be Tesla bailing out XAI. How do you feel about that? Not at all. I mean, honestly, we had recent reports from Elon saying that XAI doesn't need any current cash. The question is obviously at what price. And the shareholder proposal, the way it is proposed, does kick it back a little bit to the board to find the right valuation. because when we lobbied for this shareholder inclusion, we kept it very generic.

32:44There is a clear definition, and I think the board has clearly said they don't want to have the responsibility of the basic decision. They are not recommending either for or against it. This is shareholders deciding by themselves whether they want XII or not. In my view, I think it will be a fantastic financial investment. I also see the synergies between XIR and Tesla just growing with the bots even more. But it is coming down to real shareholder democracy, shareholders deciding whether this investment has to be done or not. Last time, the courts exerted their power over what shareholders did sign off.

33:22And at that time, the judge discussed that it was unfathomable amount of money that was being offered to Elon Musk and that the board didn't have enough independence. What do you make of this current pay package proposal in that respect? I mean, first of all, we're in Texas. We're not in Delaware anymore. And then let me just quickly address Delaware. That judgment, if it stands in appeal, and we will know in a couple of months, there is an October 15th hearing, and then we'll probably know by January, February whether it stands or not. But if that judgment stands, Tesla has in this current proxy now also a shareholder vote on whether they want to have a plan B in place for the 2018 package to be fulfilled.

34:03So if that plan B becomes necessary, because Delaware's courts don't understand what our shareholder interest is, but so if that happens, it will actually cost us billions and billions more, probably 50 to 60 billion more than what it initially cost us in 2018. So I don't see how that would be in any favor to us shareholders. The package will live, plan A or plan B. But the question is, will we get it the cheap way, the 2018 way, or will we have to pay$60 billion more because a judge ruled against us? And eventually, maybe$1 trillion if you hit an$8.5 trillion market capitalization and then some key operational targets.

34:46And we'll be happy to pay, I can tell you that, because if he gets it, we got it. Alexandra Mertz of LNF Investor Services. It's great to have you back on the show. Coming up, we'll talk to the guy positioned to be the Silicon Valley candidate for California governor. Tech founder Ethan Argyle joins us. This is Bloomberg Tech.

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36:15Caroline Hyde:Amazon Health AI presents Painful Thoughts I, um, I can't stop scratching my downtown Yeah, but I'm not itching to go downtown and tell a receptionist I'm here to talk about my downtown Some things you'd rather type than say out loud There's no question too embarrassing for Amazon Health AI Chat your symptoms and get virtual care 24-7 Healthcare just got less painful

36:51President Trump welcomed top tech leaders to the White House yesterday to discuss AI. At the dinner, CEOs reiterated their pledges to invest hundreds of billions in the United States, while Trump said chip makers that didn't build in the United States would face substantial tariffs. Just take a listen. Chips and semiconductors, and we'll be putting tariffs on companies that aren't coming in. will be putting a tariff very shortly. You probably are hearing we'll be putting a fairly substantial tariff, or not that high, but fairly substantial tariff, with the understanding that if they come into the country, if they're coming in, building, planning to come in, there will not be a tariff.

37:34Caroline Hyde:We continue with technology and politics. Start-up founder Ethan Agarwal is aiming to position himself as the Silicon Valley candidate in a run for California governor. The two-time startup founder has raised money from VC firms like Andreessen Horowitz in the past. Now he's looking to win votes with his tech forward campaign pitches. Ethan Agarwal joins us now. This is early in a cycle, it seems. There will be a crowded field of many political heavyweights, likely others from the technology industry. What chances do you really have of being governor of California? There's a lot of other candidates that are running mostly from Southern California.

38:12most of whom are politicians. My view is if you are generally happy with the way things are going in California, you have lots of other options. If you are looking for a systematic reset and a complete change, I present a different opportunity. A different opportunity that leans into maybe crypto being an ability to pay your taxes. You're leaning into DMV apps, for example. But at the same time, a load of our team can't get into work today because the bar is down. So I'm interested as to what the infrastructure perspective is here. Yeah. Hey, Caroline. Good to see you. I mean, look, first and foremost, I trust Californians, which is something that has been lost.

38:51Our politicians love telling us what to do. Infrastructure is a key part of the platform. What's happening is Californians like people come here. I mean, Ed and I were just talking. People come here because they want to live a great life. They want to enjoy the weather. They want to build something for their family. And that stopped happening because jobs aren't available here. You guys saw the jobs report this morning. Companies are leaving the state. We're overregulated. You can't build a house. You can't do anything without the government trying to get a piece of it or trying to tell you what to do.

39:18That's what politicians love to do. So what we need is someone who understands that Californians themselves can be trusted, who actually likes Californians and who actually wants them to realize their potential. California is a state of massive potential, and we're just not realizing it because of all this regulation.

39:33Caroline Hyde:OK, let's bring up some of the policies that are on your platform, because I think that was Caroline's question. What is the specific proposal you have to fix infrastructure like BART, to fix housing, jobs, creation in Silicon Valley, etc.? Yeah, it starts and ends with CEQA. CEQA is the California Environmental Quality Act. It was passed in the 70s when Reagan was governor. And it initially had some good ideas, but it's been leveraged and extorted to all help at this point where anybody can sue anybody to stop any construction from happening. And that's why you don't see modular construction happening in San Francisco.

40:07That's why you don't see construction happening and housing in L.A. That's why there was a water treatment facility in Huntington Beach. It was going to do 50 million gallons of drinkable water. It got stopped under CEQA. There's 600 ,000 people that live up in Mendocino that are getting a PG &E. PG &E's plant is getting shut down. They're not going to have access to reliable power because the salmon and the eel are going to have trouble. I mean, these are just ridiculous things that are happening in California. I think that California humans should actually live well. Sorry, I'm sorry to the team in New York as well.

40:38Caroline Hyde:I'm going to jump in here. You're basically saying I want to deregulate. Yes. Very similar to what the Trump administration is proposing across a number of industries. Yeah, I don't think this is a Democratic or Republican issue. I think this is just common sense. Like the reason California is losing half a million people is because the regulation is driving jobs out. It's that simple. Like other states like Arizona, they beg companies to come to their states to create jobs. California does everything it can to kick companies out. Masa Sun announced that he's investing a trillion dollars in data centers.

41:09All of that money is going to Arizona. Why is it not coming to California? Whatever you think of Elon, I mean, we just talked about his pay package. Whatever you think of the guy, Tesla is based in California. They moved to Texas and they're creating 22 ,000 jobs in Gigafactory there. Why are those jobs not in California? Are we shocked that people are leaving? Of course not, because there's no jobs here. It's really that simple. In terms of policy and how you work with an administration that perhaps the current governor is very much on TikTok actively working against, I'm interested as to what you think the relationship of Silicon Valley and whether you think that it's a voting base that will get behind you.

41:46Because boy, are they pro the administration, some of them at the moment it feels. And you're running on a Democratic ticket. I am running as a Democrat. 34 % of California voted for Trump. So the notion that California is a deep blue state is just not true. We're not 95-5 or 90-10. We need to understand that the state has shifted. And again, I don't blame people. They're frustrated with what they're seeing. So look, my view is if you want to vote for somebody who's going to kind of keep things the same, there's a lot of smart candidates. There's Katie Porter, Antonio Villarosa, et cetera, who are doing a good job in SoCal.

42:20But if you are actually frustrated with what's happening and you think the state can realize its potential better, that's where you come to me, where you want a little less regulation, a little less of government all over your back. We are, of course, going to be inviting you alongside other candidates to be joining us as the race heats up for California Governor, Ethan Agarwal. We appreciate your time today. Stay well. Meanwhile, coming up, Qualcomm CEO, Cristiano Armand, joining us to discuss the chip designers' new partnership with BMW, deepening that relationship as it aims to improve self-driving capabilities.

42:52This is Bloomberg Tech.

43:07Qualcomm, well, it's steering deeper into the auto industry, teaming up with BMW to debut its new Snapdragon Ride Pilot. It's an automated driving platform designed to boost safety and driver assistance. The system is just being rolled out in the all-new BMW iX3. Let's bring in Qualcomm CEO Cristiano Amon for more. You call it a revolutionary driver assistance system. How is your software stack different? Look, we are incredibly excited about what we did with BMW. It's been three years in development, focused on safety, and it's different for a number of reasons. I think the first one is one of the things you saw about BMW iX3, it's the incredible range.

43:49So when you talk about assisted driving and autonomy, you need to put server class computing power in those cars. And with Qualcomm technology, there is no compromise. You have all the computing power, but you still have efficiency on power consumption. You can get incredible range. The second thing is scalable. It goes into every tier car. So we're super excited about it.

44:15Caroline Hyde:Cristiano, I've been studying the Snapdragon Ride Pilot, the SOC architecture. the software piece. This is highly analogous with the camera-based system that Tesla has, right, with FSD. You just talked about it being scalable for that reason. Did you benchmark against that? So two different important parts. First, the architecture is scalable starting from basic level ADAS all the way to multiple cameras and multiple sensors for you to do navigation on autopilot in urban environment and highway environments. That means it can scale to entry-level ADAS systems and entry-level cars all the way to the full capabilities.

45:05The other thing is it's been certified now in 60 countries and it's launching and a lot of people will be able to see the performance. Actually, we're super excited for people to see how it performs. And one thing that is great about this, we've done this with BMW, but it's available for the entire industry. Every OEM will be able to use it. And BMW and Qualcomm, we want that. And people will be able to see it, compare. And I think that's a great opportunity.

45:34Caroline Hyde:My question was one of sort of an academic one, because it's the argument of a camera-based only system from an economic standpoint versus also including lidar and radar but you're super focused on the compute not just performance but energy usage of the compute could you talk a little bit about how you engineered to that level yes i think the qualcomm dna ed is it's about efficient computing because we we design all of our chips assuming there's a battery on the other side it's not plugged to the wall. So I think you have the benefit of a lot of the Qualcomm energy efficiency compute, and you have the ability to get a lot of the computing power required in an architecture that's actually incredibly efficient from a thermal management and from a power management.

46:20The second thing to fully answer your prior question is you do have the capabilities to do navigates on autopilot in urban and high environments, even if you have complex sensors or cameras and radars. Cristiano, push us forward because your real focus on auto has been one of diversification of Qualcomm more broadly. Of course, the auto sector has its trials and tribulations. How much is this going to drive growth for you, for the business in the longer term? Caroline, that's a great question. Remember, we talk about our pipeline of$45 billion in automotive, which is kind of translating into revenue.

46:57We see quarter after quarter record revenue for Qualcomm, especially because it's not about moving with the size of the market, it's moving into share as new cars are launched. For technology, the pipeline is converting. And I look at this stack that we're launching on the Snapdragon Ride Pilot with BMW, is we look at that as an opportunity for expansion. In the$45 billion pipeline, one-third of that is ADAS, and it's included, of course, the BMW project. But now other OEMs can use it, and that's going to be upside on the$45 billion pipeline.

47:38Caroline Hyde:Cristiano, last night the president hosted a number of technology leaders at the White House. I believe you were invited, but unable to attend. And his message was very simple. Tariffs are coming specific to chips, but those that invest in America will be spared. How is Qualcomm thinking about that? You know, a lot of emphasis gets put on TSMC in Arizona, but is that like big enough to serve all of you? Yes. It's unfortunate that we couldn't attend. We send a representative, but we had the big party in San Diego at a stadium for the 40th anniversary of Qualcomm. And to your question, look, we're excited about that.

48:16Remember, we're a fabulous company. So we need a supply chain that is resilient and in America. We like the fact that TSMC, which is one of our suppliers and invest in America. We like the fact that Samsung, another one of our suppliers, invest in America. And for Qualcomm, this is actually great news. We want diversification of manufacturing. We want more capacity in America.

48:39Caroline Hyde:Is Intel an option, Cristiano? Not an option today. I think we would like Intel to be an option. They have been talking about moving to the next process technology, which they call it the one that comes after 18A. For us, we need a technology that has efficient power consumption. I think we just had this whole conversation on car. So if in the future Intel is ready for us, we'll be an option. Right now, our suppliers will at TSMC and Samsung. Qualcomm CEO, Cristiano Amon. It's great to have you back on Bloomberg Tech. Thank you very much. That does it for this edition of Bloomberg Tech. Ed, what a week.

49:21Caroline Hyde:Yeah, huge headline. One trillion comp package for Elon Musk. We have months to digest it. Don't forget, check out the podcast. You know where to find it on Bloomberg Terminal and online on Apple, Spotify and iHeart. A short week, but a big week. From New York City and San Francisco, this is Bloomberg Tech.

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