Tesla shareholders have approved Elon Musk’s record-breaking $1 trillion pay package, supported by 75% of votes at the company’s annual meeting. The deal ties Musk’s rewards to ambitious goals — including raising Tesla’s market value to $8.5 trillion, producing 20 million vehicles, and launching one million robotaxis. Critics call it excessive, but the board insists Musk is vital to Tesla’s future. Despite regulatory scrutiny and declining sales, Tesla shares have surged 62% in six months.
Tesla Shareholders Approve Elon Musk’s Record $1 Trillion Pay Package
Tesla shareholders have approved a record-breaking compensation plan for CEO Elon Musk, potentially worth nearly $1 trillion (£760 billion).
The unprecedented pay deal, supported by around 75% of shareholder votes, received thunderous applause during Tesla’s annual general meeting on Thursday.
Musk, already the world’s richest person, must significantly increase Tesla’s market value over the next 10 years to unlock the full reward. If he meets specific performance milestones, he could receive hundreds of millions of new Tesla shares.
While the enormous payout has drawn criticism, Tesla’s board argued that Musk’s departure would be a major loss for the company and that the package was essential to keep him motivated.
Following the vote, Musk appeared on stage in Austin, Texas, where he danced as the audience chanted his name.“What we’re about to embark upon is not merely a new chapter for Tesla, but an entirely new book,” Musk told shareholders.
“Other shareholder meetings are snoozefests, but ours are bangers. Look at this — this is sick,” he added.
Musk’s Targets and Vision
To receive the full payout, Musk must achieve ambitious goals, including:
1. Producing and delivering 20 million Tesla vehicles along with one million robots.
2. Achieving 10 million subscriptions to Tesla’s Full Self-Driving (FSD) feature.
3. Launching one million self-driving Robotaxi vehicles into operation.
4. Reaching up to $400 billion in core profits.
5. Raising Tesla’s market value to $8.5 trillion, up from the current $1.4 trillion.
Under the deal, Musk will not receive a salary. However, meeting these milestones would grant him over 400 million Tesla shares, worth roughly $1 trillion at peak valuation.
During the meeting, Musk emphasized Optimus, Tesla’s humanoid robot project, rather than the company’s struggling electric vehicle business, disappointing some analysts.
First unveiled in 2022, Optimus is intended to perform “unsafe, repetitive, or boring tasks” using Tesla’s AI systems that also power its cars. Musk described it as central to Tesla’s future, envisioning the robot assisting both in factories and, eventually, in homes.
Analyst Gene Munster from Deepwater Asset Management commented on X (formerly Twitter):
“Let it sink in where Musk’s head is at. His vision of the ‘new book’ starts with Optimus. No mention of cars, FSD, or robotaxi yet.”
Later, Musk did discuss the company’s Full Self-Driving (FSD) system, saying Tesla was “almost comfortable” letting drivers “text and drive essentially.”
Regulatory Scrutiny and Market Reactions
U.S. regulators continue to investigate Tesla’s self-driving system after reports of vehicles running red lights or driving on the wrong side of the road, leading to crashes and injuries.
Despite these challenges, Tesla shares rose slightly in after-hours trading and are up more than 62% over the past six months.
However, Tesla’s sales have declined over the past year, following Musk’s alignment with former U.S. President Donald Trump—a relationship that has since fractured.
Investor Reactions
Tesla shareholder Ross Gerber, CEO of Gerber Kawasaki, told BBC News that the deal marks “another notch in the unbelievable things you see in business.”
He acknowledged Musk’s visionary goals but noted Tesla’s financial struggles and growing competition in the robotaxi and humanoid robot markets. Gerber said his firm recently reduced its stake in Tesla, citing concerns over the polarization surrounding Musk’s public persona.“Elon seems to be divorced from the reality that his opinion among the public is so low,” Gerber said.
Meanwhile, Dan Ives of Wedbush Securities, a longtime Musk supporter, called the CEO “Tesla’s biggest asset.”“We continue to believe the AI valuation is being unlocked, and that Tesla’s shift to an AI-driven valuation is now underway,” Ives said.
Legal and Governance Context
Ann Lipton, a law professor at the University of Colorado, noted that while Musk has hit targets ahead of schedule before, it’s uncertain whether he can repeat that success. She also highlighted that the new package places no restrictions on his external activities, despite his political controversies.
Musk currently owns 13% of Tesla, and shareholders have twice approved large performance-based pay plans in the past. However, a Delaware judge struck down the earlier package, ruling that Tesla’s board was too closely tied to Musk.
Since then, Tesla has reincorporated in Texas, and the Delaware Supreme Court is reviewing the prior decision.
The new compensation plan faced opposition from major institutional investors such as Norway’s sovereign wealth fund and CalPERS, the largest U.S. public pension fund, leaving Musk reliant on retail investors for support.
Musk and his brother Kimbal Musk, a Tesla board member, were both allowed to vote.
In the weeks leading up to the meeting, Tesla’s board ran a public campaign urging investors to support Musk’s deal. A promotional video on VoteTesla.com featured board chair Robyn Denholm and director Kathleen Wilson-Thompson praising his leadership.
Kathryn Hannon of RBC Brewin Dolphin said the new deal would give Musk greater voting power, something he had sought for years.“Whether you like him or not, Elon Musk is a visionary,” Hannon said. “This package aligns him with shareholders on Tesla’s journey toward long-term success.”