More than 75% of Tesla shareholders voted to approve a staggering pay package for Chief Executive Elon Musk that could award him $1 trillion.
Tesla shareholders voted to approve a $1-trillion compensation plan for Chief Executive Elon Musk, a record-breaking package intended to help the world's richest person focus on the electric vehicle maker.
Shareholders broke into applause and began chanting Musk's name at the annual meeting Thursday, where it was announced that more than 75% of voters opted to support the pay plan. Under the terms of the package, Musk will earn portions of Tesla shares incrementally if he reaches specific milestones related to company performance and valuation. Experts say Musk would still pocket billions of dollars even if he only meets a few of the targets. The milestones increase over time up to an $8.5-trillion company valuation and also include product goals, such as delivering 20 million vehicles, deploying 1 million robotaxis for commercial operation and garnering 10 million full self-driving subscriptions. Musk stressed in the presentation after the meeting that he has big plans to build up to 1 million humanoid robots per year. The plan could eventually award Musk a 25% stake in Tesla. He currently owns about 13% of shares, making him the largest individual shareholder. Less than a year ago, a Delaware judge repeatedly blocked a smaller pay proposal. In a letter late last month, Tesla board chair Robyn Denholm urged shareholders to vote in support of the package, writing that Musk might step down from his position if it was not approved. 'The fundamental question for shareholders at this year’s Annual Meeting is simple,' Denholm wrote on Oct. 27. 'Do you want to retain Elon as Tesla’s CEO and motivate him to drive Tesla to become the leading provider of autonomous solutions and the most valuable company in the world?' Some experts have said that Tesla's board is beholden to Musk and does not act independently. Chancellor Kathaleen McCormick, the Delaware judge who twice struck down an earlier pay package for Musk in 2024, said the approval process for that package was 'deeply flawed.' In her decision, McCormick wrote that Musk had exerted unfair influence over shareholders and that negotiations over his pay plan were not legitimate. Bart Naylor, an expert on corporate governance and shareholder rights with the consumer advocacy group Public Citizen, said Tesla's board was pushing for the staggering pay plan 'because Musk told them to.' 'The plan is unfathomably large,' Naylor said. '$1 trillion is many orders of magnitude beyond what the most overpaid CEO normally makes.' Musk's new compensation package is worth 10 times more than the salaries of every Fortune 500 chief executive combined, Naylor said. Fortune 500 executives make an average of $18.5 million a year, totaling $9 billion in compensation annually. 'He's got a lot of energy and you might say he's an above-average CEO, but there's no way Musk is worth that much,' Naylor said. Musk's frequent drug use would get other executives fired on the spot, he added. Several groups, including unions, corporate watchdogs and proxy advisory firms, have publicly opposed the pay package. Norges Bank Investment Management, which manages revenue from Norway’s natural resources and is one of Tesla’s biggest investors, said earlier this week that it planned to vote against Musk’s proposed pay. The fund holds a 1.16% stake in the company. Although Musk's previous pay proposal was blocked in court, Naylor said it's very unlikely the new plan will face legal challenges. Tesla reincorporated in Austin, Texas, in 2024, where state law is much more accommodating to corporations than in Delaware. Board chair Denholm said Musk's staggering pay is necessary to keep him focused amid distractions, including his other companies, X, xAI and SpaceX. Musk also took a major detour from Tesla earlier this year when he joined the Trump administration as head of the so-called Department of Government Efficiency. Musk's foray into politics alienated customers and investors, setting off a brand crisis that resulted in decreased sales and share value. Tesla is at an 'inflection point,' Denholm wrote, as it transitions away from reliance on sales of its traditional electric vehicles. The future of the company depends on the successful deployment of autonomous driving technology, experts say, as well as other artificial intelligence ventures, including the humanoid robot Optimus. At the shareholder meeting, Musk said Optimus would be Tesla's biggest product ever, capable of ending poverty through expanded human services such as medical care. He said the robot would become more important to society than cellphones. 'I'd like to give a heartfelt thanks to everyone who supported the shareholder vote,' Musk said at the meeting. 'What we're about to embark upon is not merely a new chapter of Tesla, but a whole new book.' Tesla shares have risen 17% this year and fell more than 4% Thursday.
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