Tesla shareholders have approved a performance-based compensation plan for the company’s chief executive officer, Elon Musk, in a bid to keep him around for at least the next decade — although it could end up being much longer. Based on Thursday’s announcement from Tesla, he isn’t going anywhere anytime soon.
About 75 percent of shares cast supported the plan, according to results from Tesla’s meeting, suggesting that there was strong support even as governance debates swirled over the unprecedented size of the award.
The package does not pay Musk a salary or cash in the near term. Instead, it links his upside potential to aggressive long-term goals in a bid to lock his focus on milestones in autonomous driving, AI, robotics, energy storage, and manufacturing efficiency — areas that Tesla says will shape its second decade.
What the Trillion Dollar Package Is Really All About
Under the terms of Tesla’s proxy statement, the grant will come in 12 tranches that will vest only if the company meets a blend of operational and adjusted profitability goals as well as market-value targets. The flashiest benchmark: increasing Tesla’s market capitalization to about $8.5 trillion in about a decade from roughly $1.5 trillion today. Each of those tranches is tied to increasing targets, and the awards are paid out as stock, not cash.
The targets are meant to drive not only scale, but the quality of earnings — think sustained operating improvement, software contribution, and durable free cash flow — rather than one-off spikes. If Tesla underperforms, big chunks of the award just never vest.
The roadmap and the hurdles to Tesla’s long-term goals
Musk characterized the vote as a validation of Tesla’s next chapter, such as AI-heavy projects like Full Self-Driving, the Optimus humanoid robot, and fleet-based services. He stood on stage with prototypes of Optimus at the meeting, marking his company’s ambition to expand beyond vehicles into robotics and automation.
Yet achieving an $8.5 trillion valuation requires more than vision. That implies continued volume growth, higher-margin software revenue, and successful expansion in energy storage — where deployments have been growing — while maintaining or improving margins. It also still needs regulatory progress on autonomy, confirmation of safety, and discipline around capital as Tesla scales new factories and computing infrastructure. Even supporters acknowledge the bar is extremely high.
Tesla has framed its “Master Plan 4” as the north star for these goals. The blueprint has been critiqued as vague by critics that include some industry analysts and governance experts. Musk has pledged to provide further details to help translate his aspirations into measurable execution, a development investors would welcome as they measure early progress against the new incentives.
Governance stakes, and dynamics for shareholders
The effort to win approval for the prize was unusually open for Tesla. The board and a handful of other executives had called for a “yes” vote in media interviews and even television ads — an unusual move for the company, which spends little on marketing. “Tesla needs to do things now, for the future of the company,” Chair Robyn Denholm said on a pre-vote conference call, urging investors to support the proposal and emphasizing that Tesla is at an inflection point. Denholm also told investors that aligning his incentives with long-term performance was important in retaining him and sustaining momentum.
Musk has said he wants about 25% in voting power — as a buffer from strategic moves he disagrees with — compared with closer to 15% now. The new stock grants, if earned, would bolster his stake and influence. That possibility has excited many of the company’s retail holders, who give Musk credit for Tesla’s rise thanks to his willingness to take risks, while reinforcing concerns from governance advocates about concentrated authority. Bodies like the Council of Institutional Investors have long challenged outsized single-executive awards, citing concerns over dilution and the independence of boards.
Legal backdrop colors the decision on pay package
The vote follows a decision by Delaware’s Chancery Court to throw out Musk’s 2018 pay package — which was worth about $56 billion at the time of its creation — finding flaws with how information was presented and disclosed. Tesla has appealed. As a provisional remedy earlier this year, the company awarded Musk an enormous share grant valued at $29 billion and will unwind that award if it ultimately prevails on appeal. Corporate law scholars say that new shareholder approval can help bolster the company’s storyline of investor backing but does not on its own solve fiduciary duty questions in court.
What Investors Will Be Watching the Week Ahead
In the near term, we will zero in on execution checkpoints: software take rates and safety data for autonomy (written about a lot in recent weeks on this topic), volume ramps and margins on vehicle programs, growth in energy storage deployment, and capital demands for AI compute/robotics.
Investors will also look at stock-based compensation expense and dilution, along with whether the board tightens disclosure around performance gates and certification of results.
For Tesla’s biggest bulls, the vote is a bet that Musk’s vision will allow it to capture new profit pools far beyond car sales. Skeptics say the targets are either too aspirational to be prescriptive or not specific enough to be enforceable. What is plain is that the bar has been set extremely high by shareholders — and an equally high-stakes incentive for Musk to make it clear.
