Will Musk become the Buffett of this era?

Tesla is rapidly becoming the Berkshire Hathaway of the tech industry. So, does this mean that its CEO Musk will become his generation’s Buffett?

Thursday was an important day for this electric vehicle manufacturer. The company held its annual shareholder meeting in Austin, Texas, where Musk learned that shareholders voted to approve granting him approximately 425 million incentive stock options. If all performance targets are met over the next ten years, these options could be worth about 1 trillion dollars.

Musk expressed his gratitude to the attendees, noting that this passionate event has become a “pilgrimage” for Tesla fans. Tesla’s annual meeting is also starting to resemble Berkshire Hathaway’s annual meeting.

In the future, their annual gatherings might become more like the Berkshire Hathaway shareholders’ meeting, dubbed the “Woodstock for Capitalists.” “The venue here is great, we love coming to the factory… but thousands of retail investors are disappointed they can’t attend… please organize a bigger venue,” said Alexandra Merz, a Tesla shareholder, former Moody’s credit officer, and founder of L&F Investor Services.

She added, “We are bigger than Berkshire Hathaway, and we will do better than Berkshire Hathaway.”

Musk agreed. If he takes action, Tesla’s annual meeting could become the “Woodstock for Tech Experts.” There, Musk could showcase SpaceX, xAI, Neuralink, The Boring Company, and Tesla itself—covering areas such as automobiles, robotics, batteries, energy storage devices, and computing chips.

Beyond the highly anticipated annual meeting, Buffett and Musk share another trait: both rarely receive traditional annual compensation.

According to Berkshire’s proxy statement, Buffett, as Berkshire’s CEO, earns about $400,000 annually. His approximately $150 billion wealth mainly comes from his holdings in Berkshire stock. Musk, on the other hand, does not have a traditional salary at Tesla; his nearly $500 billion net worth comes from his holdings in Tesla and other companies.

Data from Bloomberg shows that the average annual salary for CEOs of S&P 500 companies is about $20 million. While Buffett and Musk’s compensation cannot compare to these figures, both are in extremely strong financial positions. Notably, Musk’s 2018 compensation incentive plan was valued at about $56 billion at the time. If investors spread this over seven years, it would amount to about $8 billion per year. Today, the value of these stock options has approached $130 billion.

There are also differences between Buffett and Musk. Berkshire Hathaway has not granted Buffett large stock-based incentive compensation.

Tesla’s stock price fell 3.7% on Friday, closing at $429.52; the S&P 500 rose 0.1%, and the Dow Jones Industrial Average increased slightly by 0.2%.

The decline in stock price after the compensation plan was approved might surprise investors, but there’s a simple explanation: the stock market is forward-looking, and investors tend to “buy the rumor, sell the fact.” The compensation plan was likely to be approved from the start. The Tesla board and shareholders have repeatedly indicated their preference to provide such compensation to their favored CEO.

Wedbush analyst Dan Ives wrote in a report on Thursday that, with the dust settling from the compensation controversy, “market focus will shift to artificial intelligence.” He said this vote solidified Musk’s position as a “wartime CEO” during the AI revolution, boosting confidence in Tesla’s future prospects.

Ives believes Tesla is developing AI applications such as autonomous driving, which will usher in a new era of profit growth for the company. He is one of Wall Street’s most bullish analysts on Tesla, giving the stock a “buy” rating and a highest target price of $600. According to FactSet data, the average analyst target price for Tesla stock is about $400.