Tesla Shareholders Approve $1 Trillion Compensation Package for Elon Musk
Tesla shareholders have approved a stock compensation package for CEO Elon Musk that could be worth up to $1 trillion if he meets specific performance targets over the next decade. This decision could make Musk the world’s first trillionaire, according to recent developments at the company’s annual meeting.
The vote passed with more than 75% of shareholders in favor, despite declining sales and criticism surrounding the unprecedented executive pay. Musk expressed his satisfaction with the outcome, saying, “Fantastic group of shareholders,” and adding, “Hang on to your Tesla stock.”
This approval came just three days after European data revealed a significant drop in Tesla sales, including a 50% decline in Germany. Analysts have warned that achieving the ambitious goals set by the board would require substantial operational and financial achievements. These include increasing Tesla’s market value nearly sixfold and delivering 20 million electric vehicles over the next 10 years—more than double the number since the company’s founding.
Musk also faces the challenge of deploying 1 million of his human-like robots, which he envisions as a “robot army” capable of transforming work and home environments. The compensation package includes intermediate steps that could grant Musk newly created shares as he progresses toward these targets, potentially adding billions to his wealth in the coming years.
This could position Musk to surpass John D. Rockefeller, currently considered America’s richest man. Guinness World Records estimates Rockefeller was worth $630 billion in current dollars at his peak over 110 years ago. Musk, with a net worth of $493 billion, according to Forbes magazine, is now closer than ever to this milestone.
Critics and Supporters of the Plan
Despite the approval, major institutional investors, including CalPERS and Norway’s sovereign wealth fund, opposed the plan. Corporate watchdogs Institutional Shareholder Services and Glass Lewis also recommended rejecting the proposal, prompting Musk to label them “corporate terrorists” at a recent investor meeting.
Sam Abuelsamid, an analyst at Telemetry, criticized the plan, stating, “It’s absurd that shareholders think he is worth this much.” Critics argue that the board remains too dependent on Musk, whose behavior has been seen as reckless, and that the compensation exceeds reasonable bounds. They also point to Tesla’s declining sales, market share, and profits, which they attribute to Musk’s involvement in conspiracy theories and political activities in the US and Europe.
Supporters, however, argue that the package incentivizes Musk to focus on transforming Tesla into an AI powerhouse. They believe his leadership is crucial for the development of self-driving vehicles and the deployment of Tesla robots in offices, factories, and homes.
“This AI chapter needs one person to lead it and that’s Musk,” said Dan Ives of Wedbush Securities. “It’s a huge win for shareholders.”
Additional Votes and Implications
Other issues were also up for a vote at the annual meeting, and Musk emerged victorious on several fronts. Shareholders approved Tesla’s investment in xAI, one of Musk’s other ventures. Additionally, a proposal to make it easier for shareholders to sue the company was rejected, maintaining the current rule that requires a minimum 3% stake.
The compensation plan is structured to award new shares contingent on meeting board-established milestones, making the trillion-dollar valuation theoretical rather than guaranteed. Musk emphasized that the vote was not primarily about money but about increasing his stake in Tesla, which will double to nearly 30%. He argued that this is essential given the future of his “robot army,” which he claims he does not trust anyone else to control due to potential dangers to humanity.
Market Reaction
Following the news of the vote, Tesla shares rose in after-hours trading but eventually flattened, closing at $445.44 (€385.4). Investors had to weigh the promise of a bold, new future against the risks associated with Musk’s potential departure from the company, which could have negatively impacted the stock.
