Tesla shareholders have given the green light to an enormous compensation plan for CEO Elon Musk, approving a package that could ultimately be worth close to $1 trillion. The vote was announced during the company’s annual shareholder meeting in Austin, Texas, and marks one of the biggest executive pay approvals ever recorded. Roughly three-quarters of voting shareholders supported the plan.
The decision comes at a time when Tesla is under pressure from a cooling electric vehicle market and heightening global competition. Despite those challenges, the approval signals that many investors still view Musk as central to the company’s future and are willing to back him even as his attention is divided across several ventures.
The vote was not without controversy. Major proxy advisory firms, including Glass Lewis and ISS, had recommended voting against the plan. Their objections centered around concerns about corporate governance and the scale of the rewards being offered.
What the Approved Pay Package Includes
Musk’s compensation package is tied entirely to Tesla’s performance. Under the plan, he can earn up to 12 blocks of stock options over the next decade if the company reaches specific milestones. If all conditions are met, Musk’s ownership in the company could rise from approximately 13% to around 25%. That would involve issuing more than 423 million new shares to him.
The structure of the award revolves heavily around Tesla’s market valuation:
- The first payout would be available once the company reaches a $2 trillion market value. Its current value stands at around $1.54 trillion.
- Nine additional tranches are linked to $500 billion increments in value, up to $6.5 trillion.
- The final two tranches require even larger jumps, with Tesla needing to reach $8.5 trillion in market value for Musk to receive the full benefit.
These goals are paired with financial performance benchmarks, starting with annual adjusted earnings of $50 billion and scaling upward to $400 billion. For context, Tesla’s most recent third-quarter results showed $4.2 billion in adjusted EBITDA.
The plan also identifies operational targets reflecting Musk’s long-term technological ambitions. These include delivering 20 million vehicles annually, maintaining 10 million active Full Self-Driving (FSD) software subscriptions, deploying 1 million Optimus humanoid robots, and operating a fleet of 1 million autonomous robotaxis.
Currently, Tesla has delivered over 8 million vehicles. The company is still refining its FSD product, now branded as “FSD Supervised,” which enhances driver assistance capabilities but still requires a human behind the wheel.
Shareholder Support for Possible Future Investment in xAI
Beyond Musk’s compensation, shareholders also reviewed a proposal involving xAI, Musk’s artificial intelligence startup launched in 2023. The proposal, submitted by individual investor Stephen Hawk, sought to authorize Tesla to invest in the new venture.
Tesla’s general counsel noted that more shareholders voted in favor than against, though many abstained. The company has not yet determined how it will move forward. The interest reflects Musk’s increasing emphasis on AI and autonomous systems across his portfolio of companies.
Musk’s Hope for the Optimus Robot Project
At the meeting, Musk also highlighted progress on Tesla’s Optimus humanoid robot initiative. He described it as a key future product and referenced broad potential applications ranging from industrial support to personal assistance. While the vision for Optimus is ambitious, Tesla has not released a commercial model, and timelines remain unclear.
The project has attracted mixed reactions. Some industry watchers see it as a natural evolution of Tesla’s automation work. Others view it as speculative and emphasize that no mass-market humanoid robot currently exists.
Concerns About Compensation Without Full Milestone Completion
Critics of the pay plan have raised concerns that Musk could receive substantial compensation even if many of Tesla’s long-term goals are not met. The award includes provisions that account for major disruptions, such as pandemics, wars, or significant regulatory changes that could affect business operations. These allowances could enable Musk to receive large payouts if certain targets become unattainable due to circumstances outside the company’s control.
Financial analysts have previously estimated that Musk could potentially secure more than $50 billion from the package even if only some milestones are reached.
The approval of this new plan unfolds while Tesla is still entangled in legal action regarding Musk’s earlier 2018 compensation package. A Delaware judge ruled that the prior award had been improperly approved by Tesla’s board. The case is currently under appeal, and the outcome could influence how this new package is treated in the future.
