Tesla shareholders voted to approve a $1 trillion compensation plan for CEO Elon Musk, a record package aimed at helping the world's richest person focus on the electric vehicle maker.
Shareholders broke into applause and began chanting Musk's name at Thursday's annual meeting, where it was announced that more than 75% of voters chose to support the pay plan.
Under the terms of the package, Musk will earn portions of Tesla shares incrementally if he reaches specific milestones related to the company's performance and valuation. Experts say Musk would still pocket billions of dollars even if he only met some of the goals.
The milestones increase over time to a company valuation of $8.5 billion and also include product goals such as delivering 20 million vehicles, deploying 1 million robotaxis for commercial operations, and obtaining 10 million full autonomous driving subscriptions. Musk highlighted in the post-meeting presentation that he has big plans to build up to 1 million humanoid robots a year.
The plan could eventually give Musk a 25% stake in Tesla. He currently owns around 13% of the shares, making him the largest individual shareholder.
Less than a year ago, a Delaware judge repeatedly blocked a lower wage proposal.
In a letter late last month, Tesla Chairman Robyn Denholm urged shareholders to vote in favor of the package and wrote that Musk could resign from his position if it was not approved.
“The fundamental question for shareholders at this year's Annual Meeting is simple,” Denholm wrote on October 27. “Do you want to retain Elon as CEO of Tesla and motivate him to drive Tesla to become the leading provider of autonomous solutions and the most valuable company in the world?”
Some experts have said that Tesla's board of directors is beholden to Musk and does not act independently. Chancellor Kathaleen McCormick, the Delaware judge who twice struck down an earlier pay package for Musk in 2024, said the process for approving that package was “deeply flawed.”
In his decision, McCormick wrote that Musk had exerted unfair influence on shareholders and that negotiations over his pay plan were not legitimate.
Bart Naylor, a corporate governance and shareholder rights expert at the consumer advocacy group Public Citizen, said Tesla's board was pushing for the staggering pay plan “because Musk told them to.”
“The plan is incredibly big,” Naylor said. “A billion dollars is far beyond what the highest-paid CEO typically earns.”
Musk's new compensation package is worth 10 times more than the salaries of every Fortune 500 CEO combined, Naylor said. Fortune 500 executives earn an average of $18.5 million a year, for a total of $9 billion in compensation annually.
“He's got a lot of energy and you could say he's an above-average CEO, but there's no way Musk is worth that much,” Naylor said. Musk's frequent drug use would get other executives fired on the spot, he added.
Several groups, including unions, business watchdogs and proxy advisory firms, have publicly opposed the pay package.
Norges Bank Investment Management, which manages Norway's natural resource revenues and is one of Tesla's largest investors, said earlier this week that it planned to vote against Musk's proposed salary. The fund owns a 1.16% stake in the company.
Although Musk's previous pay proposal was blocked in court, Naylor said the new plan is highly unlikely to face legal challenges. Tesla will reincorporate in Austin, Texas, in 2024, where state law is much more accommodating to corporations than in Delaware.
Chairman Denholm said Musk's staggering salary is necessary to keep him focused amid distractions, including his other companies, X, xAI and SpaceX. Musk also took a major detour from Tesla earlier this year when he joined the Trump administration as head of the so-called Department of Government Efficiency.
Musk's foray into politics alienated customers and investors, triggering a brand crisis that resulted in declining sales and stock value.
Tesla is at an “inflection point,” Denholm wrote, as it moves away from relying on sales of its traditional electric vehicles. The company's future depends on the successful deployment of autonomous driving technology, experts say, as well as other artificial intelligence companies, including the humanoid robot Optimus.
At the shareholder meeting, Musk said Optimus would be Tesla's biggest product to date, capable of ending poverty through expanded human services like healthcare. He said the robot would become more important to society than mobile phones.
“I would like to wholeheartedly thank everyone who supported the shareholder vote,” Musk said at the meeting. “What we are about to embark on is not simply a new chapter of Tesla, but an entirely new book.”
Tesla shares have risen 17% this year and fell more than 4% on Thursday.
