Tesla’s $1 Trillion Pay Deal for Elon Musk Set to Win Shareholder Backing
Tesla’s shareholders are expected to approve a staggering $1 trillion, 10-year pay package for CEO Elon Musk at the company’s annual meeting this November. Despite the eye-watering figure, experts say the deal is likely to pass because it aims to secure Musk’s long-term commitment and ease investor concerns over Tesla’s future in artificial intelligence and robotics.
The automaker’s board has dubbed the plan “A Super Ambitious Incentive Package for a Pioneering, Ambitious and Unique CEO”. It includes steep earnings and valuation targets, rewarding Musk with millions of shares if he meets them. On Friday, Musk was granted 96 million restricted shares worth over $31 billion, to vest over the next two years. His total 2025 compensation could exceed $113 billion, according to Equilar, a compensation research firm.
Designed to Retain Musk and Boost AI Focus
Tesla’s board says the package is intended to prevent Musk from leaving. It also focuses on transforming the company into a global leader in AI and robotics. According to a securities filing, the board believes Musk is the only person capable of unlocking Tesla’s full potential.
Negotiations for the deal began in February and included 37 legal meetings and 10 direct meetings with Musk. The CEO demanded 25% ownership, full control of Tesla’s future direction, and compensation for a $56 billion 2018 package recently overturned by a Delaware court.
The $31 billion in shares is part-compensation for that 2018 deal, though the board noted Musk cannot double-dip. If he wins the case in court, he will not receive the additional payment.
Concerns Raised Over Governance and Priorities
Some investors and governance experts have raised concerns. Critics argue the money could be better spent on research, development, or acquisitions. Kristin Hull, CIO of Nia Impact Capital, called the plan “irresponsible” and is exploring options to challenge it.
Dan Coatsworth, analyst at AJ Bell, questioned whether Musk deserved the pay, especially as Tesla faces stiff competition and brand challenges. He added, “Surely Musk should be fighting for his job, not Tesla’s board fighting to keep him?”
Musk has reportedly threatened to leave Tesla more than once. The board feared top AI talent could follow him out the door, adding urgency to their efforts to retain him.
High Stakes for Tesla’s Future
If approved and targets are met, Musk’s ownership would increase from 13% to 25%. The package is structured in 12 performance-based tranches. Tesla could reach a market valuation of $8.5 trillion—surpassing Microsoft, Meta, and Alphabet combined—if all goals are achieved.
Major Tesla investors such as Vanguard, BlackRock, and State Street have not yet revealed how they plan to vote. However, past records show Vanguard and BlackRock supported Musk’s 2018 plan, while State Street opposed it.
Public sector representatives and union leaders have criticised the board’s decision. Randi Weingarten, President of the American Federation of Teachers, urged shareholders to reject what she called a “money grab”.
Despite this, support appears strong. Equilar’s Courtney Yu noted that shareholders have repeatedly approved Musk’s pay packages in the past, saying, “While it may seem outlandish now, shareholders will get tremendous value if Elon Musk is successful.”
Tesla’s shares rose 3.6% on Friday to close at $350.84. They remain down 13% in 2025, amid worries over its weakening EV business and increasing global competition.
with inputs from Reuters
