Tesla shareholders have overwhelmingly approved a $1 trillion compensation package for CEO Elon Musk, marking what could be the largest corporate pay deal in history if he meets ambitious performance targets over the next decade.
The approval came during Tesla’s annual shareholder meeting in Austin, Texas, where more than 75% of votes were cast in favor of the package. Elon Musk celebrated the decision by dancing on stage alongside the company’s Optimus robots, with the audience erupting in chants of his name. He described the moment as the start of a ‘new book’ for Tesla, emphasizing the company’s shift towards robotics and artificial intelligence.
To maximize his payout, Musk must guide Tesla to a market valuation of $8.5 trillion, up from its current $1.4 trillion, and achieve several operational milestones. These include deploying 1 million self-driving robotaxis, selling 10 million full self-driving subscriptions, producing 20 million electric vehicles, and selling 1 million humanoid robots. Additionally, Tesla must generate $400 billion in actual earnings for four consecutive quarters.
The pay package faced criticism from major institutional investors, including Norway’s sovereign wealth fund and the California Public Employees’ Retirement System, who voted against it. Critics argued that it concentrates too much power in Musk and ignores Tesla’s recent struggles, such as declining sales and safety concerns with its self-driving technology.
Musk’s previous $56 billion pay package from 2018 was invalidated by a Delaware court, leading Tesla to reincorporate in Texas. Shareholders had reapproved that package under Texas law, but the Delaware court rejected it again, citing concerns over Musk’s influence. The new package is designed to align Musk’s interests with long-term shareholder value, but it does not constrain his activities outside the company.
Despite the opposition, supporters like Wedbush Securities’ Dan Ives see Musk as Tesla’s biggest asset and believe the approval unlocks the company’s AI valuation potential. However, analysts note that Musk’s polarizing persona and political affiliations have alienated some customers, potentially impacting Tesla’s brand value.
If Musk succeeds, he could become the world’s first trillionaire, with his ownership stake in Tesla rising to 25%. The company faces stiff competition in the autonomous vehicle and robotics sectors from rivals like Waymo, and it must navigate regulatory investigations into its self-driving features.
The approval underscores shareholders’ faith in Musk’s vision, but it also highlights the high stakes involved. Tesla’s future growth hinges on executing this ambitious roadmap, which could redefine the automotive and tech industries.