Tesla Shareholders Approve Musk’s Compensation Proposal
Tesla shareholders have expressed strong support for CEO Elon Musk’s ambitious compensation plan, which could be valued at nearly $1 trillion. This decision came during the company’s annual shareholder meeting held in Austin, Texas, where approximately 75% of the voting shares were in favor of the proposal.
The compensation package, announced by Tesla’s board in September, consists of 12 tranches of stock that Musk can earn over the next decade if the company meets specific performance milestones. Should all targets be achieved, Musk’s stake in Tesla could grow from around 13% to 25%, significantly increasing his shareholdings by more than 423 million shares. This arrangement also enhances Musk’s voting power within the company, responding to demands he’s publicly made since early 2024.
To unlock the first tranche of shares, Tesla must hit a market capitalization of $2 trillion, quite an increase from its current valuation of $1.54 trillion. The following nine tranches would be granted if the company’s market value rises by another $500 billion, up to a total of $6.5 trillion. The last two tranches hinge on each of Tesla’s market caps breaking $1 trillion, meaning the company would need to reach a remarkable $8.5 trillion for Musk to receive the entire package.
Alongside the market cap goals, the proposal outlines various other ambitious targets, including 20 million vehicle deliveries, 10 million active Fully Self-Driving (FSD) subscriptions, 1 million robot deliveries, and 1 million operational robotaxis. By September, Tesla had already delivered over 8 million vehicles, as noted in a company statement.
The plan also sets out revenue milestones that begin at $50 billion in annual adjusted earnings, eventually aiming for $400 billion. In its third quarter, Tesla reported an adjusted EBITDA of $4.2 billion, indicating that considerable growth will be necessary to achieve these revenue targets.
Despite the challenging nature of the pay plan, some analysts have suggested Musk could still generate tens of billions of dollars, even if he falls short on many of the targeted goals. Reports indicate that reaching a few more attainable milestones might still allow him to secure over $50 billion.
The shareholder vote follows a Delaware Court of Chancery ruling from the previous year, which declared Musk’s 2018 compensation plan was improperly granted by Tesla’s board and needs to be reversed. Musk has appealed this decision, and the matter is slated for review by the Delaware Supreme Court.
