Tesla shareholders have approved an unprecedented compensation package for Elon Musk that could total nearly $1 trillion. The plan, supported by 75% of votes at Thursday’s annual meeting, drew loud applause and cheers from attendees.
Musk, already the world’s richest individual, must substantially increase Tesla’s market value over the next decade to claim the full payout. If he meets every milestone, he will receive hundreds of millions of new Tesla shares.
Critics have called the deal excessive, but Tesla’s board said the company cannot afford to lose Musk’s leadership and vision.
Musk celebrates victory in Austin
After the vote, Musk appeared on stage in Austin, Texas, dancing as the audience chanted his name. “We’re not just opening a new chapter for Tesla; we’re writing a whole new book,” he said.
He added, “Other shareholder meetings are dull. Ours are electric. Look at this energy!”
To earn the full payout, Musk must raise Tesla’s market capitalization from $1.4 trillion to $8.5 trillion and deploy one million fully self-driving Robotaxi vehicles into service.
Focus turns to the Optimus robot
Musk shifted attention from Tesla’s electric cars to the company’s humanoid robot, Optimus, surprising analysts who had expected updates on vehicle production.
“Let it sink in where Musk’s focus lies,” wrote Gene Munster, managing partner at Deepwater Asset Management, on X. “His new vision begins with Optimus. Still no mention of cars, self-driving, or robotaxis.”
Later, Musk addressed Tesla’s full self-driving software, saying the company was “almost comfortable” allowing drivers to “text and drive essentially.”
Self-driving technology faces regulatory scrutiny
US regulators are investigating Tesla’s self-driving feature after reports of vehicles running red lights or driving on the wrong side of the road. Some incidents resulted in crashes and injuries.
Despite the scrutiny, Tesla shares rose slightly in after-hours trading and have gained over 60% in the past six months.
Political ties and brand image challenges
Tesla’s sales have declined in the past year after Musk publicly supported former US President Donald Trump. Their later falling-out added further controversy.
Investor Ross Gerber, CEO of Gerber Kawasaki, described Musk’s compensation plan as “another unbelievable moment in business history.” He said Tesla faces financial and reputational challenges despite Musk’s ambitious goals.
Gerber questioned the market demand for humanoid robots and highlighted competition from robotaxi companies such as Waymo.
He added that his firm reduced its Tesla holdings, saying, “Musk’s polarising persona has damaged the brand. Elon seems unaware of how unpopular he has become.”
Analysts continue to back Musk
Dan Ives, senior analyst at Wedbush Securities, called Musk “Tesla’s most valuable asset.” In a note after the vote, he said, “Tesla’s AI-driven value is now being unlocked. The next growth phase has begun.”
Musk already holds about 13% of Tesla shares. Shareholders had previously approved another multibillion-dollar pay package tied to a tenfold increase in Tesla’s market value, which Musk achieved.
Legal challenges and Tesla’s move to Texas
A Delaware judge struck down the earlier pay plan, ruling Tesla’s board was too close to Musk. Tesla later reincorporated in Texas, and the Delaware Supreme Court is now reviewing the lower court’s decision.
The new deal faced opposition from major institutional investors, including Norway’s sovereign wealth fund and the California Public Employees’ Retirement System, the largest US public pension fund.
With these funds opposed, Musk relied on Tesla’s large base of retail investors to secure approval.
Tesla board pushes support campaign
Musk and his brother Kimbal, a board member, were both eligible to vote at Thursday’s meeting. In the weeks before the vote, Tesla directors launched an extensive campaign to persuade shareholders to back the package.
A video on votetesla.com featured board chair Robyn Denholm and director Kathleen Wilson-Thompson praising Musk’s leadership and long-term vision. The campaign drew criticism from governance experts for blurring the line between shareholder communication and marketing.
