It does resound in a Trumpian style. Too big and brash to be countered, Elon Musk raked in the approval from Tesla’s shareholders for his incredible record pay package of $1 trillion (€920 billion). But will the Tesla CEO be free from the court, after it blocked his previous wages?
Tesla shareholders have voted to approve an unprecedented $1 trillion stock-based compensation package for chief executive Elon Musk. The decision consolidates his control over the company and reignites long-standing concerns about corporate influence concentrating so heavily on a single individual.
Ten-year plan
The proposal passed victoriously with roughly 75% support at the company’s annual general meeting in Austin, Texas. As it represents the largest pay deal ever granted to an executive, the vote is historic and ripples way beyond the automotive industry.
To recap, the pay package is structured as a ten-year plan divided into twelve tranches. If all are met, he could gain up to 12% in additional Tesla equity, raising his ownership stake from around 15% to nearly 30%.
Basically, the shareholders have voted in favour of weakening their own stake. It shows how Tesla’s value is more about personal cult than actual value (which would translate into a stock price tenfold lower). Whether Musk’s personality will remain strong enough to see the plan through to its deadline remains to be seen.
Sparking debate
Nonetheless, the scale of the award is staggering. To unlock the full payout, Musk must increase Tesla’s market capitalisation to $8.5 trillion—more than five times its current valuation. Supporters argue that such ambitious targets ensure the plan rewards success rather than speculation.
Such an enormous paycheck can but spark debate. The company’s board waged a sustained campaign to secure approval, sending letters, emails, and even direct calls to small shareholders, urging them to vote in favour of Musk. And, like Trump would do, Musk threatened that rejection might prompt the entrepreneur to step back from Tesla and focus entirely on his other ventures (artificial intelligence firm xAI, the social network X, and SpaceX).
No limit
Institutional investors didn’t bite that bait. Norway’s sovereign wealth fund, the New York State pension fund, and advisory firms ISS and Glass Lewis all advised voting against the proposal.
They cite the plan’s excessive scale, the absence of meaningful performance safeguards, and the lack of independence within Tesla’s board. They remain convinced that his existing stake sufficed as an incentive.
Those arguments did little to persuade Tesla’s legion of believers. For them, there seems to be no limit to rewarding Musk for his effort to transform Tesla into a global leader in electric vehicles in such a short span of time.
“A new book”
But there might be a tail to this tale. The courts struck down two earlier versions of Musk’s pay package. In both cases, judges ruled that Tesla had misled shareholders and that its board failed to act independently of Musk’s influence.
In a reaction, Tesla moved its headquarters from the more tightly governed state of Delaware to Austin, Texas. In this state, shareholders have fewer rights to block the pay package.
Optimus as a prison guard
Moments after the result was announced, Musk strode onto the stage to cheers from supporters. Beside him stood a prototype of Optimus, the humanoid robot Tesla hopes to mass-produce within the decade.
Musk declared the moment the start of “not just a new chapter but a new book” for Tesla. And along came a bold promise to soothe the investors, of course.
Optimus would one day not only outnumber humans and help “eradicate poverty,” but also free the country from its jail problem, with Optimus functioning as guards to assist convicted criminals. Or when a CEO knows how to please a crowd..
