Tesla shareholders have overwhelmingly approved a compensation package for CEO Elon Musk potentially worth $1 trillion, the largest such deal in corporate history, solidifying his control over the electric vehicle maker’s ambitious shift into artificial intelligence and robotics.
The vote occurred at the company’s annual shareholder meeting in Austin, Texas. More than 75% of the votes cast supported the controversial package.
The approval follows a prior warning from Tesla’s board that Musk might leave the company if the compensation plan was not granted. Some investors had criticized the deal as “excessive.”
Despite these concerns, many stakeholders view the package as a critical incentive to retain Musk and ensure his focus on the company’s long-term growth. His vision aims to transform Tesla from a car manufacturer into a leader in AI and robotics.
Musk appeared on stage at the meeting, where he was joined by dancing robots, and declared, “What we are starting is not just a new chapter for Tesla, but an entirely new book.” He emphasized that his priority is increased shareholding power to drive his vision, not merely the financial value.
He pledged to begin production of the “Cybercab,” a driverless taxi, by April and to unveil a new “Roadster” electric sports car. Musk also stated that Tesla needs to build a large AI chip manufacturing plant and may explore a future partnership with Intel.
The compensation package is structured to reward Musk only if Tesla achieves a series of ambitious operational and market value milestones over the next decade. These targets include delivering 20 million vehicles, deploying 1 million robotaxis, selling 1 million humanoid robots, and generating $400 billion in core profit.
For the full package to be realized, Tesla’s stock value must surge from its current $1.5 trillion to $8.5 trillion. Musk will receive an additional 1% in shares for each milestone attained.
If all targets are met, Musk would accumulate a total of 12% of the company’s shares. Even if not all goals are achieved, he stands to receive tens of billions of dollars in stock.
The actual value of the package currently stands at approximately $878 billion, a figure that varies with Tesla’s fluctuating stock price. Musk has the option to receive the compensation in cash or fewer shares.
Major investors, including Norway’s sovereign wealth fund and advisory firms Glass Lewis and ISS, had opposed the plan. However, the approval reportedly eases some concerns that Musk might divert his attention to other ventures like SpaceX or his AI firm, xAI.
Shareholders at the meeting also re-elected three directors, approved annual director elections, and endorsed a new compensation plan to replace an earlier version that was still pending in court. Furthermore, they voted to support Tesla’s investment in xAI, despite a notable number of abstentions due to potential business overlaps.