Tesla Shareholders Approve Musk’s Pay Package

Elon Musk is already the world’s richest man, but after his new Tesla pay plan was approved today, he could become the world’s first trillionaire over the next 5-10 years. The new plan would pay him up to $1 trillion in Tesla stock.

Tesla announced that more than 75% of shares voted in favor of the pay package during the company’s annual shareholder meeting. The vote didn’t include the 15% of the company that Musk already owns.

The crowd at the meeting broke into cheers and chants when the results were announced. Musk thanked the shareholders and the Tesla board soon after. “I super appreciate it,” he said.

Musk doesn’t take any salary, but the approved pay package comes in the form of a stock grant that would give him as much as 423.7 million additional Tesla shares over the next 10 years.

In order to get there, Tesla would have to double in size a couple of times. Here’s how the plan is structured.

The first tranche of stock gets paid out 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.

Tesla also laid out a series of earnings milestones for Musk, 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.

Other goals tied to the newly approved pay plan include reaching 20 million vehicle deliveries, 10 million active FSD (Full Self-Driving) subscriptions, 1 million bots (Optimus humanoid robots) delivered and 1 million robotaxis in commercial operation. To date, Tesla has delivered more than 8 million vehicles, according to its September proxy statement.

So he really could make $1 trillion in stock but only if his company is wildly successful. For some perspective, NVIDIA is currently the world’s biggest company with a market capitalization of $4.5 trillion. So getting Tesla up to $8.5 trillion in a decade means it needs to be as big as NVIDIA and Apple (the #2 company) combined. Currently, Tesla is the #10 company by market cap.

As you may recall, there is a big backstory to this vote today. Musk had a previous pay plan which was twice shot down by a court in Delaware.

After Musk’s 2018 pay package was first rescinded, he moved Tesla’s corporate home from Delaware to Texas. He followed suit with SpaceX and other companies’ headquarters. In 2024, under Texas law, shareholders once again voted to approve the pay package.

But Delaware’s so-called “court of equity” once again ruled against one of the largest CEO payouts in modern history. Following that unfavorable ruling, Muskvoiced displeasure with the state and its “activist chief judge”, arguably fueling a series of corporate exits that Delaware lawmakers have attempted to staunch with legislation.

“He had a big megaphone,” said Lawrence Hamermesh, Widener University Delaware Law School professor emeritus and a former corporate lawyer. “I think there’s more to the movement than just Elon stirring the pot, but I think that had some effect.”

The video of the shareholder’s meeting is about 2 1/2 hours long but here it is cued up to the moment when the announcement is made that Musk’s pay package has passed. Once the cheering dies down, the meeting ends and Elon Musk comes out and gives a speech about the future of robots and the near future of Tesla cars. He says, for instance, that in the next few months people using FSD may be allowed to text while the car drives. Whether or not that’s allowed will depend on how the safety numbers look from the fleet. He also announced production of the CyberCab would start next April.

As always, Musk is not a smooth speaker, quite the opposite. And yet, what he’s talking about is often so interesting that it winds up being pretty compelling viewing. I guess that’s one reason why shareholders are so eager to keep him around.