Tesla chief Elon Musk has secured a record-breaking pay deal potentially worth nearly $1 trillion after shareholders voted in favor of the package. The approval came with 75% of votes in support, sparking cheers at the company’s annual meeting on Thursday.
Musk, already the world’s richest person, must drastically boost Tesla’s market value over ten years to claim the full reward. If he meets all performance goals, he will receive hundreds of millions of new Tesla shares.
The size of the payout triggered strong criticism, but Tesla’s board warned that Musk could leave if the plan failed. They argued the company cannot afford to lose him.
A triumphant moment for Musk in Texas
After the announcement, Musk walked onto the stage in Austin, Texas, dancing to chants of his name. “What we’re about to embark upon is not just a new chapter for Tesla, but a whole new book,” he told the crowd. He added with a grin, “Other shareholder meetings are boring, but ours are wild. Look at this. It’s incredible.”
To unlock the entire payout, Musk must raise Tesla’s market value to $8.5 trillion from its current $1.4 trillion. He also needs to deploy one million self-driving Robotaxi vehicles in commercial use.
Focus shifts to the Optimus robot
During the meeting, Musk surprised many analysts by focusing his remarks on the Optimus humanoid robot. This disappointed some long-time Tesla watchers who wanted him to address the company’s struggling electric vehicle business.
“Let it sink in where Musk’s head is at,” wrote analyst Gene Munster from Deepwater Asset Management on X. “His new vision begins with Optimus. Still no mention of cars, full self-driving, or robotaxis.”
Later, Musk did briefly mention Tesla’s full self-driving system, saying the company was “almost comfortable” allowing drivers to “text and drive essentially.”
Scrutiny over self-driving safety
US regulators continue investigating Tesla’s self-driving feature after several reported incidents. Some involved cars running red lights or driving on the wrong side of the road, leading to crashes and injuries.
Despite the controversy, Tesla shares traded slightly higher after hours and have surged more than 62% in the past six months.
Political ties and brand challenges
Tesla’s sales have dropped over the past year since Musk publicly aligned with former US President Donald Trump. Their relationship eventually collapsed earlier this year.
Investor Ross Gerber, chief executive of Gerber Kawasaki, said Musk’s pay deal is “another notch in the unbelievable things you see in business.” He believes Tesla faces serious challenges despite Musk’s ambitions.
Gerber questioned whether there will be significant demand for humanoid robots and noted Tesla’s growing competition in the robotaxi market from firms like Waymo.
He also revealed that his firm recently cut its Tesla holdings, citing “the polarisation of Musk’s persona” that has “damaged the brand’s value.” “Elon seems detached from the reality that his popularity among the public is very low,” he said.
Supporters see Musk as Tesla’s greatest asset
Dan Ives from Wedbush Securities, a long-time supporter of Musk, called him “Tesla’s biggest asset.” In a note after the vote, Ives wrote, “We believe Tesla’s AI-driven valuation is now beginning to unlock. The march toward an AI future for Tesla is underway.”
Musk already owns 13% of Tesla shares. Shareholders had previously approved a massive pay plan rewarding him for multiplying Tesla’s market value tenfold—a goal he already achieved.
Legal hurdles and corporate restructuring
A judge in Delaware later struck down that earlier pay deal, ruling that Tesla’s board was too closely tied to Musk. Tesla then shifted its corporate base from Delaware to Texas. The Delaware Supreme Court is now reviewing the judge’s decision.
The new compensation plan faced opposition from major institutional investors such as Norway’s sovereign wealth fund and CalPERS, the biggest public pension fund in the United States.
Because of that resistance, Musk relied heavily on Tesla’s unusually large group of small retail investors to push the vote through.
Campaigning for the deal
Musk and his brother Kimbal, who sits on Tesla’s board, were both allowed to vote at Thursday’s meeting. In recent weeks, Tesla’s board members launched a marketing push to rally support for Musk’s deal.
A promotional video on votetesla.com featured board chair Robyn Denholm and director Kathleen Wilson-Thompson praising Musk’s leadership and vision for the company’s future.
