Tesla shareholders approve $1tn pay package for Elon Musk
Tesla shareholders approved a $1tn compensation plan for CEO Elon Musk on Thursday, awarding the world’s richest person what would be the largest corporate payout in history if he meets the goals necessary to receive it.The pay package, which several high-profile investors opposed, demonstrates that shareholders still believe Musk can lead the automaker in an era dominated by robotics and artificial intelligence.The result of the vote was announced at the annual shareholder event in Austin, Texas, with more than 75% of investors voting in favor of the plan.Chants of “Elon” erupted in the room at the news of its approval.“Thanks, guys,” Musk said, after briefly dancing on stage alongside the company’s Optimus robots.
Musk described the Optimus robots, which have not gone into mass production, as the future of the company and of humanity.He reiterated a claim that it would be “the biggest product of all time”, and suggested they could be used in everything from healthcare to prisons.“You now get a free Optimus and it’s just going to follow you around and stop you from doing crime,” Musk said.“You don’t have to put people in prisons and stuff.It’s really wild to think of the possibilities.
”Musk had previously said he wanted the pay package for more control over the company and exert “strong influence over this robot army” that he vowed to build as the company branches into robotics,Musk’s staggering compensation is comparative with the GDP of entire countries, exceeding that of Ireland, Sweden and Argentina,It vastly exceeds federal funding for entire government programs such as annual cost of Snap food benefits and dwarfs that of other tech moguls such as Mark Zuckerberg,Critics of the package, including some investors, argued that awarding Musk concentrated power in one erratic leader and ignored the challenges the company has faced,“Elon Musk just got $1tn for failure.
Sales are down, safety risks are up, and his politics are driving customers away.This isn’t leadership – it’s the world’s most expensive participation trophy,” the protest group Tesla Takedown said in a statement.If Musk delivers on the lofty milestones in the pay package laid out at the annual meeting, he could become the world’s first trillionaire.To do so, he would need to guide Tesla to $8.5tn in market capitalization, eight times what it’s worth today.
He would also be required to deploy millions of autonomous vehicles and humanoid robots, and sustain the company’s bottom line in the hundreds of billions over the next decade.The major goals of the compensation plan, split into 12 tranches, lay out a path for Tesla to reach that enormous market capitalization.If he brings the company to that financial height, Musk would be able to cash in on an additional 12% of the company’s stocks.To do so, he has to be vested in the company for at least seven and a half years.He would also have to help develop a long-term succession plan for the company he has led for more than 20 years.
The stock options provided by the new compensation plan, on top of shares guaranteed to him in his 2018 package, would leave Musk with 25% ownership of Tesla’s stock.As of 5 November, Tesla stock was trading close to its 52-week high, at about $450 per share.Over the course of a decade, Musk is required to deliver 20m of Tesla’s electric vehicles to buyers, sell 10m active full self-driving subscriptions, develop and sell 1m humanoid robots and deploy 1m robotaxis in commercial service.Musk will also be required to bring the company to $400bn in actual earnings for four consecutive quarters.Tesla’s actual earnings for the third quarter of 2025 were $4.
2bn, down 9% from the year prior,As of November, Musk’s net worth was $460bn, the highest in the world, according to Bloomberg’s Billionaire Index,Shareholders also approved a plan that would compensate Musk after his 2018 compensation plan was invalidated by a court in Delaware,The pay plan, worth an estimated $56bn, was challenged by a single stockholder, who won his case,The Delaware court of chancery rejected Musk’s pay package twice.
After Musk’s 2018 pay package was first rescinded, he moved Tesla’s corporate home from Delaware to Texas.He followed suit with SpaceX and other companies’ headquarters.In 2024, under Texas law, shareholders once again voted to approve the pay package.But Delaware’s so-called “court of equity” once again ruled against one of the largest CEO payouts in modern history.Following that unfavorable ruling, Muskvoiced displeasure with the state and its “activist chief judge”, arguably fueling a series of corporate exits that Delaware lawmakers have attempted to staunch with legislation.
“He had a big megaphone,” said Lawrence Hamermesh, Widener University Delaware Law School professor emeritus and a former corporate lawyer.“I think there’s more to the movement than just Elon stirring the pot, but I think that had some effect.”In considering whether Musk had undue influence in being awarded that 2018 pay package, Eric Talley, a Columbia Law School professor, noted that the judge recognized that other “superstar CEOs” like Meta’s Mark Zuckerberg and Amazon’s Jeff Bezos were not awarded these kinds of incentive-based contracts.The best public interest journalism relies on first-hand accounts from people in the know.If you have something to share on this subject, you can contact us confidentially using the following methods.
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