Tesla shareholders approve "trillion-dollar compensation package," Musk's shareholding may increase to 25% after meeting targets in ten years

Despite recent reports of opposition from major shareholders, the vote at Tesla's shareholder meeting surprisingly approved CEO Musk's historically highest executive compensation package of $1 trillion.

After the annual shareholder meeting held in Austin, Texas, on Thursday, November 6, Eastern Time, Tesla announced the voting results, showing that over 75% of voting shareholders supported the company's compensation plan for Musk, which could reach up to $1 trillion. According to media reports, after the voting results were announced, the venue erupted in enthusiastic cheers calling out Musk's name, "Elon."

Musk took the stage amid the cheers, thanked the shareholders present, and stated, "What we are about to start is not just a new chapter in Tesla's future, but a whole new epic." He added, "What I want to say is, please continue to hold your Tesla shares."

Musk then looked ahead to Tesla's future. He first talked about Tesla's humanoid robot, Optimus, expressing confidence that AI-trained robots could lower costs and make goods accessible to more people, thereby unleashing economic vitality. He strongly promoted the advancements in Tesla's autonomous driving technology, particularly revealing that in a few months, Tesla's Full Self-Driving (FSD) feature would allow users to send text messages while driving or when activating the FSD feature to control the vehicle.

Musk disclosed that Tesla's fully electric autonomous vehicle, Cyberab, designed specifically for the Robotaxi self-driving taxi service, would begin production in April 2026, and he stated that autonomous driving technology would ultimately save millions of lives.

Musk's compensation plan was one of several proposals voted on at this Tesla shareholder meeting, and the vote on the plan was one of the most closely watched events for Tesla recently. This compensation package could push Musk's personal fortune beyond $1 trillion, with a stake in Tesla of up to 25%, provided that Musk leads Tesla to achieve several significant market value and performance targets.

After the shareholder meeting approved the compensation plan, Tesla's stock, which had fallen 3.5% on Thursday, turned positive in after-hours trading, rising over 3% at one point, before slightly turning down again.

Tesla Chairman Warns of Risks of Losing Musk

The compensation plan proposed by Tesla's board in September aims to grant Musk stock worth up to $1 trillion over ten years, increasing his stake from the current 15% to about 25%.

According to the plan, to receive the full compensation, Musk needs to increase Tesla's market value from the current $1.5 trillion to $8.5 trillion within ten years, sell 12 million vehicles, have 1 million Robotaxi vehicles in commercial operation, achieve 10 million subscriptions for the FSD software, and deliver 1 million humanoid robots.

Musk had previously publicly threatened that if shareholders rejected his compensation plan again, he would leave Tesla. Reports indicate that he warned Tesla board members that he might shift his focus to other companies under his umbrella outside of Tesla, including the rocket company SpaceX, the AI startup xAI, and the brain-computer interface company Neuralink The day before the shareholder meeting vote, Tesla's board chair Robyn Denholm emphasized the risks of losing Musk while promoting the compensation plan this Wednesday, warning that losing Musk could lead Tesla to "lose significant value," as the company's valuation largely relies on the future promises of its autonomous vehicles and humanoid robots.

Last week, Morgan Stanley warned that if Musk's compensation plan is rejected at the shareholder meeting, Tesla's stock price could immediately face a drop of over 10%. The rejection of the plan would be seen by the market as a vote of no confidence in Musk's leadership, and it could also bring uncertainty to the company's strategic outlook and increase the risk of key talent loss.

Shareholders like the Norwegian Oil Fund recently expressed opposition to the compensation plan

Although the market previously widely expected Musk's substantial compensation plan to pass, recent news has emerged of significant Tesla shareholders opposing the plan.

Wallstreetcn mentioned last week that the largest public pension plan in the U.S., the California Public Employees' Retirement System (CalPERS), which holds about 5 million shares of Tesla stock, stated it would vote against the plan. Drew Hambly, CalPERS' global equity investment director, said in an email statement: "The proposed CEO compensation plan for Tesla is several orders of magnitude larger than those of comparable companies. This pension plan typically measures proposed compensation against performance and industry norms. This plan would further concentrate power in a single shareholder."

On Tuesday, one of Tesla's top ten shareholders, the Norwegian Oil Fund, expressed appreciation for "the tremendous value created by Mr. Musk's visionary leadership," but would vote against Musk's compensation plan, believing the plan could dilute shareholder value and failed to mitigate the "key person risk" of betting Tesla's future on Musk.

Additionally, two shareholder advisory firms, Glass Lewis and ISS, have recommended that investors reject the plan linking Musk's compensation to stock price and operational performance.

Some executive compensation experts and other major shareholders have warned that the compensation plan poses significant risks to investors.

Experts state that the compensation plan violates governance principles, not only due to its enormous scale but also because the board so explicitly bets Tesla's future on a leader with numerous conflicts of interest, who may consolidate unchecked power over the company.

Charles Elson, founding director of the Weinberg Center for Corporate Governance at the University of Delaware, stated that Tesla's board is being "coerced" by a "superstar CEO."

Krishna Palepu, a professor at Harvard Business School focusing on corporate governance, believes that the compensation plan aligns with shareholder interests by linking Musk's pay to significant stock price growth and requiring him to hold the shares he receives for five years. "The numbers are large because the targets are large."