Tesla shareholders approve $1 trillion pay package for Elon Musk

Tesla shareholders approve $1 trillion pay package for Elon Musk

Tesla shareholders have greenlit a historic $1 trillion compensation plan for CEO Elon Musk, contingent on meeting ambitious performance targets over the next decade. The deal, approved this week, ties Musk's earnings directly to Tesla's growth-including vehicle production, robotics, and market valuation milestones-while forgoing a traditional salary.

Musk's vision and shareholder confidence

At Tesla's annual shareholder meeting in Texas, Musk energized the crowd, contrasting Tesla's gatherings with what he called "snoozefests" at other companies. "Tesla's meetings are bangers," he declared, reinforcing his reputation as a polarizing yet transformative leader. Despite criticism over his political alignments-including support for former U.S. President Donald Trump and far-right figures abroad-Musk retains a devoted base of investors who back his long-term ambitions.

Financial analyst Dan Ives of Wedbush Securities likened Musk to "a modern-day Albert Einstein or Thomas Edison," arguing that his leadership is irreplaceable. "Tesla without Musk is like pizza without cheese," Ives said, emphasizing the CEO's role in driving innovation, particularly in artificial intelligence. While Musk's political stances may alienate some customers-sparking protests at Tesla showrooms earlier this year-analysts like Matt Britzman of Hargreaves Lansdown contend that such controversies are outweighed by the "Musk premium," a perceived $460 billion in value tied to his leadership.

"There's edgy behavior, there are haters, but a lot of people love that. And that's why he's the richest person in the world."

Dan Ives, Wedbush Securities

The targets: A high-stakes gamble

The compensation package hinges on Tesla achieving unprecedented scale:

• Producing 20 million vehicles, including 1 million Robotaxis.
• Deploying 1 million humanoid robots (Optimus).
• Growing Tesla's market capitalization from $1.4 trillion to $8.5 trillion-a nearly sixfold increase.

Ann Lipton, a law professor at the University of Colorado, called the goals "incredibly high milestones" but noted the board retains discretion to adjust terms if external factors interfere. "If intervening events prevent him from reaching the goals, the board can deem them met anyway," she explained. Critics argue this flexibility could dilute the rigor of the targets.

The package also imposes no restrictions on Musk's extracurricular activities, from political commentary to his other ventures like SpaceX and X (formerly Twitter). "He didn't pull back from political commentary even after this package was proposed," Lipton observed, suggesting Tesla's board may struggle to rein in his broader influences.

Risks and rewards: A double-edged sword

Stephanie Valdez Streaty of Cox Automotive acknowledged Musk's visionary prowess but warned that his unpredictability-compounded by his sprawling business empire-could distract from Tesla's core mission. "The board's responsibility is to ensure he stays within the guardrails," she said, referencing past controversies that temporarily dented Tesla's brand.

Yet if Musk delivers, the rewards could redefine industrial ambition. For context, $1 trillion could purchase 20 million Model Y Teslas (at $50,000 each) or a $10 million mansion daily for 250 years. Ives remains bullish: "Does it help sell cars in Europe? No. But does it help Tesla win the AI race? Yes."

"People laughed when his 2018 pay package was approved. And he hit those milestones well ahead of schedule."

Ann Lipton, University of Colorado

What's next

With the vote settled, Tesla's focus shifts to execution. The board must now balance Musk's autonomy with accountability, ensuring his attention remains on Tesla amid competing priorities. Should he succeed, the payoff for shareholders-and Musk's legacy-could extend beyond Earth, aligning with his aspirations for Mars colonization. For now, the market watches closely as Tesla's "modern-day Edison" charts an audacious course.