Over 75% vote in favor of unprecedented compensation deal tied to ambitious growth milestones and market cap targets.
Tesla shareholders overwhelmingly approved a compensation package for CEO Elon Musk that could be worth as much as $1 trillion on Thursday, with more than 75% of voting shares cast in favor during the company's annual meeting. The unprecedented approval marks the largest executive pay package in corporate history.
Tesla General Counsel Brandon Ehrhart announced the results at the meeting, prompting cheers and chants from the crowd. Musk celebrated on stage alongside a pair of Optimus robots, telling shareholders: "I super appreciate it. Thank you, everyone. What we're about to embark upon is not merely a new chapter on the future of Tesla but a whole new book."
Structure of the Pay Package
The compensation for Musk, already the world's richest person with an estimated net worth of $473 billion, consists of 12 tranches of shares to be granted if Tesla hits certain milestones over the next decade. Musk will not receive any salary under the arrangement.
The first tranche gets paid out if Tesla hits a market capitalization of $2 trillion, up from its current $1.54 trillion valuation. The next nine tranches would be awarded if Tesla's value increases by increments of $500 billion, up to $6.5 trillion. Musk would earn the last two tranches if the market cap rises by increments of $1 trillion, meaning the company would need to reach $8.5 trillion for him to receive the full package.
For perspective, that $8.5 trillion target would require Tesla shares to jump 466% from today's price — about 70% higher than Nvidia's $5 trillion market cap, currently the world's most valuable company.
Operational Milestones
Beyond market capitalization targets, other goals tied to the pay plan include reaching 20 million vehicle deliveries, 10 million active Full Self-Driving (FSD) subscriptions, 1 million humanoid robots delivered, and 1 million robotaxis in commercial operation. To date, Tesla has delivered more than 8 million vehicles, according to its September proxy statement.
Musk would need to remain Tesla CEO for 7½ years to vest in any shares from the new pay package, although he may continue in his other CEO roles at SpaceX and xAI.
Increased Control and Voting Power
The package would increase Musk's ownership from about 13% to 25%, adding more than 423 million shares to his holdings. This addresses demands Musk has made publicly since early 2024 for greater voting control over the company.
On Tesla's latest earnings call, Musk explained his reasoning: "It's not like I'm going to go spend the money. There needs to be enough voting control to give (me) a strong influence – but not so much that I can't be fired if I go insane."
Opposition and Concerns
Despite the overwhelming approval, the pay package faced notable opposition. Norway's sovereign wealth fund, Tesla's sixth-largest external investor, voted against the compensation plan, stating: "While we appreciate the significant value created under Mr. Musk's visionary role, we are concerned about the total size of the award, dilution, and lack of mitigation of key person risk — consistent with our views on executive compensation."
Top proxy advisors Glass Lewis and ISS recommended voting against the package. Glass Lewis estimates that the entire S&P 500 combined paid all its CEOs about $9 billion last year, meaning Musk could potentially earn as much as every other major corporate CEO combined.
Corporate governance expert Nell Minow, chair of ValueEdge Advisors, called Musk a "part-time CEO" and said she voted against the plan, citing his multiple business interests and political activities.
Legal Background
Shareholders voted on the new plan after the Delaware Court of Chancery ruled last year that Musk's earlier 2018 pay plan was improperly granted by the Tesla board and must be rescinded. Musk has appealed that ruling, and the matter will be decided by the Delaware State Supreme Court.
The vote followed weeks of aggressive campaigning by Tesla, its board of directors, and executives. The company repeatedly fired off public appeals for shareholders to approve the package, even running television advertisements about the vote — something it doesn't do for its cars.
What It Means
The deal sets up Elon Musk to become the world's first trillionaire, though he would only receive the full compensation if Tesla achieves extraordinary growth targets. Tesla shares rose more than 3% in after-hours trading following the announcement.
The approval represents a significant endorsement of Musk's vision to transform Tesla from a pure electric vehicle manufacturer into a robotics and artificial intelligence powerhouse, though the company must achieve unprecedented growth before Musk realizes any financial benefit from the package.
