Tesla shareholders have approved an unprecedented pay package for CEO Elon Musk that could potentially amount to $1 trillion if ambitious performance targets are met over the next ten years. The plan, which was approved by more than 75% of shareholders, includes the issuance of 423.7 million shares of Tesla stock in 12 tranches, each contingent on meeting specific milestones such as the delivery of 20 million electric vehicles, the deployment of 1 million robotaxis, and the achievement of $400 billion in EBITDA and an $8.5 trillion market cap. While the deal has been approved by the majority of shareholders, it has faced significant opposition from institutional investors, including Norway’s sovereign wealth fund, which is the largest pension-pool investor in Tesla and has publicly rejected the plan, citing concerns about share dilution, key-person risk, and the independence of the board.
Musk himself has responded to the criticism by dismissing opponents as ‘corporate terrorists,’ calling proxy advisors such as Institutional Shareholder Services and Glass Lewis ‘asinine’ in his defense of the package. He argues that the deal locks him into Tesla for at least eight to ten years, aligning his incentives with shareholders as the company continues to expand into artificial intelligence, robotics, and autonomous mobility. Supporters of the plan argue that it provides a strong financial incentive for Musk to drive the company’s growth and innovation, while corporate governance advocates caution that such a massive compensation package could set a troubling precedent for executive pay in the tech sector.
Despite the controversy, Musk’s approval of the package highlights the ongoing tension between executive compensation and shareholder interests in the tech industry. With Musk currently the world’s richest person, holding a net worth of $487.5 billion according to Forbes, the deal could significantly increase his stake in the company to as much as 29%, up from about 15%, although the actual payout will depend on whether the company meets the lofty targets set by the shareholders. The move also raises important questions about the role of corporate governance and the extent to which high-profile executives should be rewarded for their contributions to a company’s growth and success.