Tesla shareholders have approved what has now become the most valuable compensation package in corporate history — a potential $1 trillion payout for CEO Elon Musk.
The decision came during Tesla’s annual general meeting at the company’s Austin, Texas, factory, where Musk took the stage to cheers and dancing robots. The board had urged shareholders to approve the package, saying it was designed to “retain and motivate Musk” as Tesla faces growing competition in the electric vehicle market and investor unease over his distractions with other ventures, including SpaceX, X (formerly Twitter), and xAI.
The board argued that the pay deal, significantly larger than the $50 billion proposed in 2018 but was struck down earlier this year by a Delaware judge, was never about enriching Musk but about “pushing the limits” of Tesla’s growth potential. It linked the payout entirely to performance milestones — both in revenue and market capitalization — that, if met, would drive Tesla’s valuation to around $8.5 trillion, making it by far the world’s most valuable company.
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Last month, Tesla Chair Robyn Denholm, in a letter to shareholders, said the electric carmaker was at a “critical inflection point” and that rejecting the package would jeopardize Tesla’s leadership in artificial intelligence and robotics.
“The fundamental question for shareholders at this year’s Annual Meeting is simple: Do you want to retain Elon as Tesla’s CEO and motivate him to drive Tesla to become the leading provider of autonomous solutions and the most valuable company in the world?” Denholm wrote.
Analysts divided on logic of trillion-dollar reward
While the board’s rationale resonated with investors — more than 75% voted in favor — analysts offered sharply contrasting takes on what the package means for Tesla’s future.
Matt Britzman, senior equity analyst at Hargreaves Lansdown, said the scale of the reward is “outrageous,” but the conditions attached to it make sense.
“Musk earns nothing unless he creates staggering value,” Britzman said. “For shareholders, it’s the ultimate alignment. If he pulls off the unimaginable, investors will be sitting atop an $8.5 trillion titan.”
Mike O’Rourke, chief market strategist at Jones Trading, praised Musk’s track record but questioned the optics.
“There’s no doubt Musk can execute the impossible in the business world,” he said. “But with Tesla’s EV business slowing, we’re surprised he hasn’t abandoned ship to focus on his private companies. For that reason alone, it was worth it for shareholders to grant the package. Still, when a $1.5 trillion company has to award a $1 trillion pay deal to the richest man alive, it’s hard to see that ending well.”
Chris Beauchamp, chief market analyst at IG Markets, said the plan isn’t an immediate financial burden because it’s performance-based.
“If he grows the company to $8.5 trillion, the questions will answer themselves in due course,” Beauchamp said. “But the concern is whether Musk can give Tesla the full attention it needs while spinning so many other plates.”
Russ Mould, investment director at AJ Bell, said most shareholders likely saw little downside.
“If Musk hits those demanding targets, everyone wins. If not, he gets nothing,” Mould said. “It’s a high-stakes gamble that reflects the cult of personality surrounding Musk.”
However, some experts believe the deal inflates unrealistic expectations. Brian Dunn, director of the Institute for Compensation Studies at Cornell University, argued that Tesla’s valuation already rests on speculative optimism.
“Is Elon Musk an extraordinary individual? Yes,” Dunn said. “Does the stock price reflect a reasonable multiple of earnings? No. The value of Tesla stock is based on faith that something extraordinary will happen. But is that worth $1 trillion of shareholders’ money? I think not.”
The pay deal symbolizes more than corporate excess — it underscores Tesla’s dependence on Musk’s vision. The board’s message was clear: retaining Musk is essential to Tesla’s identity and long-term growth. Yet the decision also revives questions about whether the company has become too intertwined with one man’s persona.