Tesla shareholders approve Elon Musk’s historic $1 trillion pay package — here’s when he could pocket the windfall
News Summary
Tesla shareholders on Thursday approved an unprecedented $1 trillion pay package for Elon Musk, following the mercurial CEO's threat to leave the company if the deal failed. This record-setting compensation could make Musk the world's first trillionaire, contingent on him achieving a series of ambitious performance targets over the next decade. The plan requires Tesla to hit milestones such as a $2 trillion valuation and 20 million vehicle deliveries, as well as a $3 trillion market capitalization and 1 million Optimus humanoid robot deliveries. If all hurdles are cleared, Tesla's market value would surge to $8.5 trillion, with Musk owning approximately a quarter of the company's shares. Over 75% of shareholders voted in favor, signaling strong confidence in Musk despite a recent slump in Tesla's stock due to flagging sales. The approval also offered significant relief to Tesla's board of directors, who had warned of Musk's potential departure should the vote fail. The package prevailed despite critics including Pope Leo XIV and Norway's oil fund, and proxy advisory firms ISS and Glass Lewis, who deemed it excessive. Notably, the compensation plan does not impose limits on Musk's political involvement, a concern for some shareholders who previously linked his work with President Trump's administration to Tesla's sales challenges. Tesla's board emphasized Musk's essential leadership for the company's complex plans to deploy millions of Optimus humanoid robots and self-driving taxis in the coming years. This historic pay plan was crafted after a Delaware judge struck down a prior $56 billion compensation package for Musk, a decision that prompted him to relocate Tesla's state of incorporation from Delaware to Texas.
Background
Musk's previous $56 billion compensation plan, approved in 2018, was struck down by a Delaware judge in early 2024, citing the package as "excessive and riddled with conflicts of interest." This ruling incensed Musk, prompting him to relocate Tesla's state of incorporation from Delaware to Texas, with the case still tied up in court. In the current year, 2025, Tesla shares have risen nearly 20% since the start of the year, yet the company has recently navigated significant challenges, including a sales slump, an aging car lineup, and heightened competition from Chinese EV firms like BYD. Musk himself admitted in July that he anticipated "a few rough quarters" for Tesla, but projected an improved outlook once the company achieved "autonomy at scale in the second half of next year" (2026).
In-Depth AI Insights
1. Why did shareholders approve such an astronomical pay package for Musk amidst Tesla's challenges? - The approval signals that, despite governance concerns and recent underperformance, a majority of shareholders view Musk as the indispensable "key man" for Tesla's future success. They accept the "Musk risk"—that his presence is a prerequisite for the company's high returns. - The threat of departure likely played a significant role, with the board and many shareholders concluding that losing Musk would be more detrimental than the cost of this compensation, especially at a critical juncture of the company's transition into AI/robotics. - The extremely ambitious performance targets, particularly the $8.5 trillion market cap and humanoid robot deliveries, align Musk's personal wealth with Tesla's most extreme growth aspirations, likely perceived as a powerful incentive rather than mere dilution. 2. How will Musk's political involvement during President Trump's tenure impact Tesla's investment risk profile? - The compensation plan's lack of restriction on Musk's political involvement, especially with Donald Trump as the incumbent President in 2025, could exacerbate Tesla's brand and operational risks. - Past shareholder concerns linking Musk's engagement with the Trump administration to Tesla's sales woes indicate that his political activities might lead to boycotts from certain consumer segments or generate unforeseen reputational damage. - While Musk's political influence might offer advantages in some areas, his unrestricted participation in a highly polarized political environment could also position Tesla as a focal point for political controversy, distracting management and introducing new uncertainties. 3. What does this pay package signal about Tesla's long-term strategy as an "emerging technology company"? - The board's and Musk's emphasis on a "robot army" and "autonomy at scale," and tying these to a trillion-dollar pay package, strongly signals Tesla's accelerated transformation from a mere car manufacturer to an AI and robotics powerhouse. - This plan is a clear endorsement of Musk's aggressive vision, indicating that Tesla's future valuation is expected to be driven by its groundbreaking advancements in AI and robotics, rather than solely by automotive sales. - This high-risk, high-reward strategy, while incentivizing Musk, also compels investors to re-evaluate Tesla's business model, competitive landscape, and valuation methodologies, considering it within the broader AI and robotics technology sector rather than a traditional automotive company.