Tesla CEO Elon Musk has secured an unprecedented pay package approved by the company’s shareholders that could be worth nearly $1 trillion (£760 billion) if he meets a series of ambitious targets over the next decade. The deal, which was endorsed by 75% of votes at Tesla’s annual general meeting on Thursday, marks the largest compensation arrangement in corporate history and reflects Musk’s pivotal role at the electric carmaker.
Musk, who is already the world’s richest person, will not receive a salary under the agreement. Instead, his compensation is entirely performance-based, tied to Tesla’s market value and other key milestones. If he successfully grows the company’s market capitalization to specified levels and achieves various operational goals, he will be granted more than 400 million additional shares of Tesla stock. At current valuations, these shares could be worth close to $1 trillion, making this pay deal unlike anything previously seen in the business world.
The Tesla board defended the package amid criticism over its staggering scale, arguing that Musk’s leadership is essential to the company’s future. They warned that without such incentives, Musk might consider leaving Tesla, which the board said would be detrimental to the firm’s prospects. The approval of the pay plan was met with enthusiastic applause from shareholders and attendees at the meeting held in Austin, Texas.
Following the announcement, Musk appeared on stage and celebrated with the crowd, dancing to chants of his name. He described the plan as the beginning of “not merely a new chapter of the future of Tesla, but a whole new book.” He added with humor, “Other shareholder meetings are snoozefests but ours are bangers. Look at this. This is sick.”
The compensation package is contingent on Musk achieving a complex set of milestones over the next ten years. These include increasing Tesla’s market value from around $250 billion at the time of the deal to as much as $650 billion, along with reaching specific financial and operational targets such as revenue and adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA). Only by hitting these goals will Musk unlock the various tranches of stock awards.
Interestingly, Musk’s early remarks during the meeting focused heavily on Tesla’s humanoid robot project, known as Optimus, rather than the company’s electric vehicles (EVs), which have traditionally been its core business. Optimus, first introduced as a prototype in 2022, is designed as an autonomous humanoid robot capable of performing “unsafe, repetitive or boring tasks.” Powered by the same artificial intelligence systems Tesla uses in its cars, Musk envisions Optimus playing a significant role in factories and eventually in everyday homes.
This emphasis on the robot project surprised some analysts and Tesla watchers who had hoped Musk would concentrate more on reviving Tesla’s EV business, which has faced challenges recently. Gene Munster, a prominent tech analyst and managing partner at Deepwater Asset Management, commented on social media that Musk’s “new book” clearly begins with Optimus, noting a lack of early discussion about Tesla’s full self-driving (FSD) technology or robotaxi ambitions.
Later in the meeting, Musk did address Tesla’s FSD system, stating that the company was “almost comfortable” allowing drivers to use it to “text and drive essentially.” This statement comes amid ongoing investigations by US regulators into Tesla’s self-driving features, following incidents where Tesla cars reportedly ran red lights or drove on the wrong side of the road, sometimes resulting in crashes and injuries.
Tesla’s stock price has been on a strong upward trajectory, rising over 62% in the past six months and edging slightly higher in after-hours trading following the announcement of the pay deal. However, the company has experienced some setbacks, including a decline in sales over the past year. This downturn coincided with Musk’s brief alignment with former US President Donald Trump, a relationship that dissolved earlier this spring.
Ross Gerber, CEO of investment firm Gerber Kawasaki and a Tesla shareholder, described Musk’s new compensation package as “another notch in the unbelievable things that you see in business.” While acknowledging Musk’s clear vision for Tesla, Gerber pointed out the company faces significant challenges, including its financial struggles and uncertainty over demand for humanoid robots like Optimus. He also noted Tesla’s stiff competition in the robotaxi space from rivals such as Waymo.
Gerber expressed concerns about Musk’s public image, stating that Musk’s polarizing persona has “demolished the value of the brand.” His firm recently reduced its