Key Takeaways
- Tesla shareholders approved a record $1 trillion compensation package for Elon Musk
- Over 75% voted in favor at Thursday’s annual meeting
- The package could eventually give Musk a 25% stake in Tesla
- Despite opposition, the plan is unlikely to face legal challenges due to Texas incorporation
Historic Shareholder Approval
Tesla shareholders have overwhelmingly approved a groundbreaking $1 trillion compensation package for CEO Elon Musk, with more than 75% voting in favor during Thursday’s annual meeting. The approval came despite significant opposition from institutional investors and corporate governance experts.
Under the performance-based plan, Musk will earn Tesla shares incrementally upon reaching specific milestones tied to company valuation and product goals. The targets escalate to an $8.5 trillion company valuation and include delivering 20 million vehicles, deploying 1 million robotaxis, and securing 10 million full self-driving subscriptions.
Board’s Defense and Opposition
Tesla board chair Robyn Denholm had warned shareholders that Musk might step down without the package, stating the vote was about “retaining Elon as Tesla’s CEO and motivating him” to make Tesla the world’s most valuable company.
However, critics including Delaware Chancellor Kathaleen McCormick called previous approval processes “deeply flawed.” Bart Naylor of Public Citizen described the package as “unfathomably large,” noting it exceeds the combined salaries of all Fortune 500 CEOs by ten times.
Legal Landscape and Future Outlook
Despite a Delaware court blocking Musk’s previous pay package, experts believe the new plan faces minimal legal risk since Tesla reincorporated in Texas in 2024, where corporate laws are more favorable.
Denholm emphasized Tesla is at an “inflection point” transitioning beyond traditional EV sales. Musk highlighted ambitious plans including producing 1 million humanoid Optimus robots annually, which he called Tesla’s future “most important product.”
“What we’re about to embark upon is not merely a new chapter of Tesla, but a whole new book,” Musk told supporters at the meeting.
Tesla shares have gained 17% this year despite a 4% drop on Thursday following the announcement.
