Tesla investors have approved a record-breaking compensation plan for Elon Musk that could total nearly $1 trillion. The package, supported by 75% of votes at Thursday’s annual meeting, drew loud applause and cheers from attendees.
Musk, already the world’s richest person, must significantly increase Tesla’s market value over the next decade to claim the full payout. If he achieves all performance goals, he will receive hundreds of millions of new Tesla shares.
Critics have called the deal excessive, but Tesla’s board said the company cannot risk losing Musk’s leadership and vision.
Musk celebrates his win 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 an entirely new book,” he said.
He added, “Other shareholder meetings are boring. Ours are electrifying. Look at this energy!”
To claim the full payout, Musk must increase Tesla’s market capitalization from $1.4 trillion to $8.5 trillion and deploy one million fully self-driving Robotaxi vehicles.
Optimus robot takes center stage
Musk shifted focus from Tesla’s electric vehicles to the company’s humanoid robot, Optimus, surprising analysts expecting updates on the car business.
“Let it sink in where Musk’s focus is,” wrote Gene Munster, managing partner at Deepwater Asset Management, on X. “His vision starts with Optimus. Still no mention of cars, self-driving, or robotaxis.”
Later, Musk briefly addressed Tesla’s full self-driving software, saying the company was “almost comfortable” allowing drivers to “text and drive essentially.”
Regulators continue scrutiny of self-driving
US authorities are investigating Tesla’s self-driving system after reports of vehicles running red lights or driving on the wrong side of the road. Some incidents led to crashes and injuries.
Despite the scrutiny, Tesla shares rose slightly in after-hours trading and have climbed more than 60% over the past six months.
Political ties and brand challenges
Tesla’s sales have slipped over the past year following Musk’s public support for former US President Donald Trump. Their later falling-out added further scrutiny to Musk’s image.
Investor Ross Gerber, CEO of Gerber Kawasaki, called Musk’s pay plan “another unbelievable chapter in corporate history.” He said Tesla faces financial and reputational challenges despite Musk’s ambitious goals.
Gerber questioned whether there is strong market demand for humanoid robots and noted competition from robotaxi rivals like Waymo.
He added that his firm reduced Tesla holdings, saying, “Musk’s polarising persona has hurt the brand. Elon seems unaware of how unpopular he has become.”
Analysts reaffirm Musk’s importance
Dan Ives, senior analyst at Wedbush Securities, described Musk as “Tesla’s most valuable asset.” In a note after the vote, he wrote, “Tesla’s AI-driven value is now being unlocked. The next growth phase has begun.”
Musk already holds around 13% of Tesla shares. Shareholders had previously approved another multibillion-dollar pay plan tied to a tenfold increase in company value—a milestone Musk achieved.
Legal hurdles and corporate relocation
A Delaware judge struck down the previous pay deal, ruling Tesla’s board was too closely tied to Musk. Tesla later reincorporated in Texas. The Delaware Supreme Court is 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 major investors opposing the plan, Musk relied heavily on Tesla’s large retail shareholder base to secure approval.
Tesla board campaigns for approval
Musk and his brother Kimbal, a board member, were both eligible to vote at Thursday’s meeting. In the weeks leading up to the vote, Tesla directors launched a campaign urging shareholders to support the deal.
A video on votetesla.com featured board chair Robyn Denholm and director Kathleen Wilson-Thompson praising Musk’s leadership and vision for Tesla’s future. Governance experts criticized the campaign for blurring the line between shareholder communication and promotional marketing.
