Tesla chief executive Elon Musk has secured shareholder approval for the largest corporate pay package in history, as investors endorsed his vision of transforming the electric car manufacturer into a global leader in artificial intelligence and robotics.
The proposal passed with more than 75 per cent support at the company’s annual meeting in Austin, Texas, where Musk bounded onto the stage to cheers – flanked by dancing robots.
Already the world’s richest person, Musk could receive as much as $1 trillion (around £880 billion) in stock over the next decade. However, once necessary deductions are applied, the package’s value drops to approximately $878 billion.
The vote is regarded as pivotal to Tesla’s future and valuation, both of which depend heavily on Musk’s ambitions to produce self-driving vehicles, launch a robotaxi network across the United States, and market humanoid robots – despite his increasingly polarising political statements affecting Tesla’s brand this year.
Tesla’s board had warned that Musk might leave if the deal were rejected. While some investors argued the package was excessive and unnecessary, others viewed it as vital to keeping Musk at the helm and ensuring that shareholders benefit from the performance-based structure.
“What we are about to embark upon is not merely a new chapter in Tesla’s future, but a whole new book,” Musk told an enthusiastic crowd of shareholders.
During his address, Musk made a series of bold pledges, including the launch of the “Cybercab” – a two-seater, steering-less robotaxi – in April, and the unveiling of Tesla’s next-generation Roadster sports car. He also said the company would need a “gigantic chip fab” to produce AI chips and suggested potential collaboration with Intel.
Shareholders also re-elected three members of Tesla’s board, voted for annual elections for all directors, and approved a replacement pay plan for Musk’s earlier package currently tied up in court.
“Other shareholder meetings are like snoozefests, but ours are bangers,” Musk joked. “I mean, look at this. This is sick.”
Investors further voted in favour of Tesla investing in Musk’s artificial intelligence start-up, xAI, although there were many abstentions. Jessica McDougall, partner at governance advisory firm Longacre Square, said this may reflect large investors’ hesitancy to approve the deal without stronger board oversight.
Many shareholders, she added, would want “assurances and convictions that there are guardrails in place to ensure there’s not too much mixing of businesses.”
Musk’s victory had been widely expected, especially as the billionaire was allowed to vote his 15 per cent stake after Tesla’s relocation from Delaware to Texas. Excluding Musk’s influence, the margin of support would typically trigger a review of CEO pay, said Jessica Strine, chief executive of Jasper Street Partners. “At Tesla, realistically there is not going to be such a review,” she said.
Some major investors, including Norway’s sovereign wealth fund and proxy advisory firms Glass Lewis and Institutional Shareholder Services, opposed the plan.
The result eases concerns that Musk could shift his focus to his other ventures, such as rocket manufacturer SpaceX and xAI.
The board and many backers argued that the record-breaking compensation ultimately benefits shareholders, since Musk must meet specific milestones before receiving any payments.
“If completed, these tranches of awarded shares would follow strong improvements in revenue growth for Tesla,” said Brian Mulberry, senior client portfolio manager at Zacks Investment Management. “Will the growth offset these concerns about dilution – or is this just giving Elon his wish of enough influence to shape the future of AI? That remains to be seen.”
Over the next decade, Musk’s targets include producing 20 million vehicles annually, operating one million robotaxis, selling one million humanoid robots, and generating up to $400 billion in core profits. To unlock the full payout, Tesla’s market value must rise from its current $1.5 trillion to $2 trillion, and eventually to $8.5 trillion.
Each operational or valuation milestone earns Musk an additional one per cent of Tesla stock, meaning he could still receive tens of billions even if he falls short of some goals.
If every target is achieved, Musk would receive a 12 per cent stake – worth about $1 trillion.
The net value of those shares would total roughly $878 billion, excluding the stock’s original value at the time of the board’s approval in early September. Musk could either pay that amount in cash or accept fewer shares accordingly.
The total value remains fluid, fluctuating with Tesla’s share price. Musk has said his main motivation is not financial, but rather to secure greater voting power in Tesla as he prepares to “build a robot army.”