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Tesla shareholders vote on Elon Musk’s $1 trillion pay package
Elon Musk, CEO of SpaceX and Tesla, attends the Viva Technology conference at the Porte de Versailles exhibition center in Paris on June 16, 2023.
Gonzalo Fuentes | Reuters
Tesla is expected to announce on Thursday the results of a shareholder vote determining whether CEO Elon Musk should receive a pay package of nearly $1 trillion worth of stock over the next decade.
There’s little mystery to the outcome.
The electric vehicle company has suggested that shareholders approve the plan. Between Musk’s substantial ownership and a hefty base of retail investors who almost always vote with the CEO, the numbers are difficult for the opposition, even though top proxy advisors Glass Lewis and ISS recommended voting against the package.
Results of the vote are expected to be shared after Tesla’s annual meeting in Austin, Texas.
Board Chair Robyn Denholm, and other Musk fans, have argued that the outsized pay plan would keep Musk at the helm of the company, and that he’s critical to Tesla’s future and its ability to compete in robotics and artificial intelligence.
Baron Capital’s Ron Baron said in a lengthy post on X, Musk’s social network, that he’s supporting the Tesla CEO.
“Elon is the ultimate ‘key man’ of key man risk,” Baron wrote. “Without his relentless drive and uncompromising standards, there would be no Tesla.”
But there are some vocal opponents. Norway’s $2 trillion sovereign wealth fund, managed by Norges Bank Investment Management (NBIM), said it would vote no. Norges is one of Tesla’s top shareholders.
“While we appreciate the significant value created under Mr. Musk’s visionary role, we are concerned about the total size of the award, dilution, and lack of mitigation of key person risk — consistent with our views on executive compensation,” NBIM said in a statement this week.
Shareholder advocate and governance expert James McRitchie, who drives a Tesla, is also opposing the plan. The company needs to address a number of risks, he said, especially around demand and profitability with the sunsetting of federal EV tax credits that have long incentivized purchases.
“Tesla has all these fanboys. So many retail investors bought the stock because they love the cars,” McRitchie said. “There’s a lot to love there, but you should also pay attention to the finances and risks.”
Tesla shares are up 14% this year after a steep third-quarter rally lifted the stock into the green following a brutal start to 2025. Musk’s purchase of $1 billion worth of stock aided the rebound.
‘Robot army’
Tesla introduced the new pay plan in September. The package for Musk, already the world’s richest person, consists of 12 tranches of shares to be granted if Tesla hits certain milestones over the next decade. It would also give Musk increased voting power over the company, acceding to demands that he’s made publicly since early 2024.
“If we build this robot army, do I have at least a strong influence over that robot army?” Musk said to analysts on the company’s third-quarter earnings call last month. “I don’t feel comfortable building that robot army if I don’t have at least a strong influence.”
The full award would give Musk, who holds about 13% of the EV maker, more than 423 million additional shares and take his stake to about 25%.
Musk would receive the first tranche of stock if Tesla hits a market capitalization of $2 trillion. Tesla’s current market cap is $1.54 trillion.
The next nine tranches would be awarded if Tesla’s value increases by increments of $500 billion, up to $6.5 trillion. Musk would earn the last two tranches if the market cap rises by increments of $1 trillion, meaning it would need to hit $8.5 trillion for Musk to get the full package.
Other goals tied to the pay plan include reaching 20 million vehicle deliveries, 10 million active FSD subscriptions, 1 million bots delivered and 1 million robotaxis in commercial operation. To date, Tesla has delivered more than 8 million vehicles, according to its September proxy statement.
The proposed plan doesn’t specify whether the FSD subscriptions must be purchased or could include free trials. Tesla currently provides partially automated driving systems, which it markets as “FSD Supervised” in the U.S. The company intends to improve its FSD Supervised systems so they don’t require human supervision on board.
Tesla also laid out a series of earnings milestones, beginning with $50 billion in annual adjusted profit and moving up to $400 billion. In the third quarter, Tesla reported adjusted EBITDA of $4.2 billion.
As Reuters previously reported, Musk could still score tens of billions of dollars without meeting most of the targets laid out for him by the board, collecting more than $50 billion just by hitting a handful of the more attainable goals.
There are also a list of “covered events” in the award terms that would allow Musk to earn shares without meeting the required operational milestones.
Covered events include natural disasters, wars, pandemics, and changes to “international, federal, state and local law, regulations or other governmental action or inaction,” that could hamper the company’s ability to design, manufacture or sell its products down the line.
There are other benefits to Musk.
The pay plan doesn’t require him to dedicate a minimum amount of time to Tesla, nor does it at all limit his involvement in politics.
In addition to leading Tesla, Musk runs xAI which has merged with X, leads SpaceX and its satellite internet business Starlink, and is a founder of brain computer interface company Neuralink and tunneling venture The Boring Company.
He’s also been heavily engaged in politics, most notably working to propel President Donald Trump back to the White House, and then leading a sweeping effort to slash the federal government at the beginning of his second term.
The National Bureau of Economic Research published a paper last month estimating that Tesla sales from October 2022 through April of this year in the U.S. would have been 67% to 83% higher without Musk’s “polarizing and partisan actions.”
Shareholders are voting on the plan after the Delaware Court of Chancery ruled last year that Musk’s earlier 2018 pay plan was improperly granted by the Tesla board and must be rescinded.
Nell Minow, a corporate governance expert and chair of ValueEdge Advisors, said she would vote against the new pay plan for Musk, describing him as a “part-time CEO” today.
“If they said we’re going to pay him a trillion dollars, but he’s going to give up all of his outside activities, he’s going to shut up about politics, and really spend all this time making this a great company, then I’d say, OK, let’s talk about it,” Minow said. “But he’s not doing any of those things.”
WATCH: CNBC’s interview with Tesla Chair Robyn Denholm
