Tesla shareholders on Thursday approved a record-setting compensation package for chief executive Elon Musk that could be worth nearly $1tn (£760bn) if long-term targets are met. The vote, held at Tesla’s annual general meeting in Austin, Texas, saw roughly 75% of shares cast in favour. The plan ties large stock awards to extreme growth milestones, including lifting Tesla’s market value from about $1.4tn to $8.5tn and putting a million Robotaxi vehicles into commercial service. Shareholders and analysts said the scale and structure of the package make it one of corporate America’s most ambitious pay-for-performance deals.
Key Takeaways
- About 75% of Tesla shareholders who voted at the annual meeting on Thursday approved the compensation plan for Elon Musk.
- The package could be worth nearly $1tn (£760bn) if Musk meets performance milestones spanning several years.
- Major milestones include raising Tesla’s market value to $8.5tn from roughly $1.4tn and commercialising one million Robotaxi vehicles.
- Musk already owns about 13% of Tesla shares and would receive hundreds of millions of additional shares if targets are achieved.
- Tesla shares rose slightly in after-hours trading and have gained more than 62% over the past six months.
- Regulators in the US are investigating Tesla’s full‑self driving (FSD) feature after incidents including vehicles running red lights or driving on the wrong side of the road.
- The deal is controversial: critics point to its scale and prior Delaware court rulings that have questioned board independence in Musk‑related packages.
- Tesla reincorporated in Texas after a Delaware judge struck down an earlier Musk award; the Delaware Supreme Court is reviewing that decision.
Background
Compensation packages that award stock for meeting stretched performance targets are not unusual for long‑tenured founders, but the size of Musk’s new plan is unprecedented. The scheme links pay to market valuation and product milestones rather than a traditional salary or short‑term financial metrics. Proponents argue such deals align executive incentives with shareholder returns over many years, while opponents say they can reward speculative promises rather than accountable, measurable progress.
Musk has previously secured large equity plans after meeting past milestones; shareholders twice ratified another high‑value package when Tesla’s market value swelled. That earlier award was later challenged in Delaware courts on the basis that some board members were too close to Musk. In response to litigation and governance questions, Tesla has changed its state of incorporation to Texas; legal review of the prior Delaware ruling is ongoing.
Main Event
At the annual meeting in Austin, the approval was met with loud applause and visible enthusiasm from some attendees. Musk appeared on stage, acknowledged the crowd and made remarks that ranged from high-level company vision to specific product lines. Shareholders cast their ballots on the proposal as part of the formal proxy items for the meeting; the result was announced as passing with about three‑quarters support among votes cast.
The compensation plan awards tranche‑based stock grants if a series of market‑capitalisation and operational thresholds are achieved. The most eye‑catching requirement is an increase in Tesla’s market value to $8.5tn from the roughly $1.4tn level reported at the time of the vote. Another explicit target is deploying one million Robotaxi vehicles commercially, tying Musk’s reward to the company’s self‑driving and robotics ambitions.
During his brief remarks, Musk spoke about multiple initiatives at Tesla, including Optimus (the company’s humanoid robot project) and full‑self driving technology. He described Tesla’s shareholder meetings as energetic and signalled his focus on broader AI and robotics projects as well as vehicle development. The tone and topics of his comments prompted mixed reactions among analysts and long‑time Tesla observers.
Analysis & Implications
The vote reinforces Musk’s centrality to Tesla’s strategy and market narrative. By granting a package that transfers additional equity only if ambitious targets are met, the board effectively doubled down on Musk’s leadership and the company’s commitment to AI‑driven growth. That may reassure investors who see Musk as the firm’s core strategic asset, but it also concentrates upside in the hands of a single individual—raising governance and stewardship questions.
Economically, the plan sets a very high bar for future valuation growth that would require sustained revenue expansion, margin improvement and successful commercial launches of new product lines such as Robotaxi. Achieving an $8.5tn market capitalisation would mean a several‑fold increase in sales, profitability or both; investors will be watching quarterly results and product progress closely to gauge feasibility.
Regulatory scrutiny complicates the outlook. US regulators are reviewing Tesla’s FSD system after multiple safety incidents that included driving through red lights and on the wrong side of the road, some resulting in crashes and injuries. Potential enforcement actions, recalls or constraints on FSD deployment would directly affect timelines for robotaxi commercialisation and could slow the path to the milestones that underpin Musk’s awards.
Comparison & Data
| Metric | At vote | Milestone target |
|---|---|---|
| Tesla market value | $1.4tn | $8.5tn |
| Robotaxi commercial units | 0 (commercial) | 1,000,000 |
| Musk ownership (approx.) | 13% | + hundreds of millions of shares if achieved |
The table highlights the gulf between current figures and the targets that would trigger the bulk of Musk’s equity awards. Meeting them would require transformational execution across vehicle production, software safety and regulatory approvals, as well as the successful scaling of new hardware and services.
Reactions & Quotes
Investor and analyst reaction varied. Some long‑time supporters framed the approval as a necessary move to retain Musk and unlock an AI‑led valuation premium; others warned that the scale of the package risks misaligning governance norms. Public commentary on social platforms and analyst notes reflected these divides, with some emphasising optimism about AI-driven upside and others urging scrutiny.
“This is sick.”
Elon Musk
The short exclamation above was delivered by Musk on stage and drew laughter and applause; it reflected the celebratory atmosphere among many retail and institutional attendees. Critics have seized on the informality as evidence of the cult‑like following Musk commands at shareholder gatherings.
“Let it sink in where Musk’s head is at.”
Gene Munster, Deepwater Asset Management (analyst)
Analyst Gene Munster used social media to note that Musk’s remarks emphasised projects beyond core vehicle lines, underscoring tension between investors who want renewed focus on electric vehicles and those who back a broader AI/robotics agenda. Others, such as Wedbush analyst Dan Ives, highlighted the potential for an AI valuation narrative to drive further upside in Tesla shares.
Unconfirmed
- Whether the Optimus project will be prioritised over electric vehicle refreshes remains speculative until Tesla publishes detailed R&D and production roadmaps.
- Timelines for deploying one million Robotaxis are unverified and depend on regulatory approvals and successful FSD safety improvements.
- Any specific court outcome from Delaware’s review of prior awards is pending and could affect future legal precedent for similar packages.
Bottom Line
The shareholder approval cements Elon Musk’s control and sets aggressive performance targets that, if met, would deliver an extraordinary transfer of value to the CEO. For investors, the decision is a bet on Musk’s ability to deliver on high‑risk, high‑reward technology bets—especially in autonomous driving and robotics—rather than a conventional compensation arrangement tied to near‑term financial metrics.
Going forward, scrutiny will focus on measurable progress: quarterly delivery and earnings trends, verifiable advances in FSD safety and regulatory clearance, and any early commercial traction for robotaxi services. The Delaware court proceedings and ongoing regulatory probes add legal and operational uncertainty; outcomes there could influence both Tesla’s strategy and how boards structure founder compensation elsewhere.
Sources
- BBC (news report) — coverage of the shareholder vote and meeting remarks.