Tesla CEO Elon Musk secured shareholder approval on Thursday for a record-breaking pay package worth up to $1 trillion, marking the largest corporate compensation plan in history.
The vote, held during the company’s annual meeting at its Austin, Texas factory, passed with more than 75% support, signaling strong investor confidence in Musk’s ambitious plans to transform Tesla into an artificial intelligence and robotics powerhouse.
Musk, already the world’s richest person, took the stage to loud cheers, flanked by dancing humanoid robots.
“What we are about to embark upon is not merely a new chapter of the future of Tesla, but a whole new book,” he declared, outlining a bold roadmap that includes launching a steering-less Cybercab robotaxi, unveiling a next-generation Roadster, and constructing a “gigantic chip fab” to produce AI chips, potentially in collaboration with Intel.
The approved compensation plan could grant Musk up to 12% of Tesla’s stock over the next decade if he meets a series of aggressive performance milestones.
These include producing 20 million vehicles, deploying 1 million robotaxis, selling 1 million humanoid robots, and achieving as much as $400 billion in core profit.
For Musk to receive the full payout, Tesla’s market capitalization would have to soar from its current $1.5 trillion to $8.5 trillion.
While the gross value of the package could reach $1 trillion, required payments would reduce its net worth to about $878 billion. The exact value will depend on Tesla’s fluctuating stock price.
The plan’s approval followed warnings from Tesla’s board that Musk might leave without the incentive. Some investors criticized the package as excessive, while others viewed it as essential to retaining Musk and aligning his goals with shareholders’.
“If completed, these tranches of awarded shares follow strong improvements in revenue growth for Tesla,” said Brian Mulberry, senior client portfolio manager at Zacks Investment Management.
Shareholders also approved several governance measures, including annual elections for all board members and a replacement pay plan for Musk’s previous compensation package, currently tied up in court.
They further backed Tesla’s proposal to invest in Musk’s AI startup, xAI, though analysts noted widespread abstentions reflected concerns about potential conflicts of interest.
Governance expert Jessica McDougall of Longacre Square noted that investors would now look for “guardrails” to ensure clear boundaries between Musk’s ventures.
Opposition to the plan came from major institutions, including Norway’s sovereign wealth fund, and proxy advisers Glass Lewis and Institutional Shareholder Services, who warned of dilution and governance risks.
Still, Musk’s victory was widely expected after Tesla’s relocation from Delaware to Texas allowed him to vote his 15% stake. The result eases investor concerns that Musk could shift his focus to other ventures such as SpaceX or xAI.
Musk, reveling in the celebratory mood, quipped, “Other shareholder meetings are like snoozefests, but ours are bangers. I mean, look at this. This is sick.”
Whether Musk can turn Tesla into the AI-driven “robot army” empire he envisions remains uncertain. But with his record-breaking compensation now approved, he has a powerful incentive, and unprecedented resources, to try.
Source: Reuters
Written By Rodney Mbua
