Tesla Shareholders Approve $1 Trillion Pay Proposal for Elon Musk
On Thursday, Tesla shareholders greenlit an astonishing $1 trillion payment plan for Elon Musk, following his threats to leave the company if it wasn’t approved.
This unprecedented payout could make Musk the world’s first trillionaire, but he must first hit various performance milestones over the next decade. Currently, Musk’s net worth is around $490.1 billion, securing his position as the richest individual globally.
The compensation will be doled out in 12 portions. Musk will receive his first batch once Tesla achieves a $2 trillion valuation and delivers 20 million vehicles. A subsequent tranche will come if Tesla reaches a market cap of $3 trillion and delivers 1 million Optimus humanoid robots.
If Tesla clears all benchmarks, its market value could skyrocket to $8.5 trillion, granting Musk ownership of about 25% of the company’s shares.
Even with the achievement of just the initial two targets, Musk stands to earn $26 billion—more than the total salaries of Mark Zuckerberg, Tim Cook, and Jensen Huang combined, as a recent Reuters analysis points out.
Over 75% of shareholders supported the proposal, as per preliminary results from Tesla’s annual meeting. This vote is seen as a significant endorsement for Musk, especially since Tesla’s stock has struggled lately due to weak sales.
The board likely sighed in relief; a failed vote could have led to Musk’s exit from the company entirely.
The approval faced criticism, including from figures like Pope Leo XIV, who argued it contradicted “the values of human life, family, and society.” Notably, Norway’s large oil fund, a key investor in Tesla, opposed the plan as well.
Major proxy advisory firms, such as ISS and Glass Lewis, recommended shareholders reject the deal, believing it to be excessive. However, Musk defended the proposal, claiming that “Tesla’s control could affect the future of civilization” in a post on X.
Ron Baron, Tesla’s majority shareholder, expressed his support, commenting that Musk embodies the essential “key man” risk and that without his unwavering commitment, Tesla wouldn’t exist.
Interestingly, the compensation plan doesn’t require Musk to limit his political involvement. This aspect concerns some shareholders who have connected political activities to Tesla’s recent sales dips.
Tesla’s board has argued that Musk’s leadership is crucial for the company’s ambitious goals, which include launching millions of Optimus robots and self-driving taxis. Musk himself hinted at these plans by mentioning the importance of influence over the proposed robot army during a conference call.
This compensation strategy was established after a Delaware judge invalidated a previous $56 billion plan, citing excessive conflicts of interest. Feeling frustrated by the ruling and ongoing legal battles, Musk relocated Tesla’s incorporation from Delaware to Texas.
Prior to the vote, Kalsi’s prediction market indicated a 92% likelihood that shareholders would back the pay package. The board urged support in a pre-meeting message, emphasizing the critical nature of the moment for Tesla’s future.
Despite a slew of disappointing financial results, Tesla shares have increased nearly 20% this year. The company faces challenges from an aging vehicle lineup and escalating competition, particularly from Chinese electric vehicle makers like BYD.
Musk acknowledged in July that the upcoming quarters might be difficult, but he expressed optimism for improvement once Tesla achieves “massive autonomy in the second half of next year.”
