shareholders

Nov. 7 (UPI) — Tesla shareholders approved an unprecedented new package for CEO Elon Musk that could see him become the world’s first trillionaire.

The firm said 75% of shareholders with voting rights on Thursday backed Musk’s 10-year pay deal, which could net him $1 trillion over that time by boosting his stake in Tesla by more than 423 million shares.

The share bonanza is contingent on him delivering on a promise to drive up Tesla’s market capitalization five-fold from is current level of around $1.5 trillion to $8.5 trillion, roughly double the size of the Japanese economy.

Shareholders at the annual general meeting at Tesla HQ in Austin, Texas, voted it through on the recommendation of Tesla’s board, arguing Musk might quit if it were rejected and that the company could not afford to lose him.

Counsel from independent advisors Glass Lewis and Institutional Shareholder Services who said the “astronomical” deal should be rejected due to “unmitigated concerns surrounding the special award’s magnitude and design,” was largely ignored.

Addressing the meeting after the result, Musk thanked the board and shareholders, saying what Tesla was poised to do was not just “a new chapter in the future of Tesla, but a whole new book.”

Under the deal, Musk will receive the stock in tranches tied to delivering financial and production targets, including 20 million new electric vehicles rolling off production lines, 10 million full self-driving subscriptions​, 1 million Optimus humanoid robots and 1 million robotaxis in service.

The first block of stock gets paid to Musk when Telsa market capitalization reaches $2 trillion with the next nine awarded each time the company’s value rises by another $500 billion, up to $6.5 trillion.

Two additional rises in market capitalization, each of $1 trillion, bringing the value to $8.5 trillion, are required for the final two stock grants to kick in.

While the deal is performance-based, it’s not set in stone — with Musk still in line to earn more $50 billion even if he fails to meet the bulk of the targets — and includes riders for so-called “covered events” with the potential to impact Tesla’s future designs, manufacturing and sales.

These include natural disasters, wars, pandemics and changes to “international, federal, state and local law, regulations or other governmental action or inaction.”

In June 2024, Musk reincorporated Tesla in Texas, the company’s headquarters and center of operations, moving from Delaware six months after a court there struck down a $56 billion pay deal the board awarded to Musk in 2018, ruling it was “unfair” and that Musk held excessive power over the rules and size of the deal.

On the same day, shareholders voted to reinstate the package, at the time the largest in corporate history.

In December 2024, the Delaware judge in the case reaffirmed her ruling in favor of the complainant, shareholder Tornetta, and ordered Musk must return what he had already received from the package.

The board eventually awarded Musk a $29 billion “good faith” package in August, aimed at keeping Musk at the helm, that would see him granted 96 million shares after two years of service in a “senior leadership role” at Tesla.

Musk’s mega-deal on Thursday came three weeks after Tesla reported Tesla reported third quarter profits down 37%, despite a jump in revenue to a record $28.1 billion on stronger sales of its electric cars in the domestic market.

Shareholders approved the pay package with as much as 75 percent support on Thursday.

Tesla CEO Elon Musk has scored a resounding victory as shareholders have approved a pay package of as much as $878bn over the next decade, endorsing his vision of morphing the electric vehicle (EV) maker into an AI and robotics juggernaut.

Shares of Tesla rose more than 3 percent in after-hours trading after the shareholders voted on Thursday. The proposal was approved with more than 75 percent support.

Musk took to the stage in Austin, Texas, along with dancing robots. “What we are about to embark upon is not merely a new chapter of the future of Tesla, but a whole new book,” he said. “This really is going to be quite the story.”

He added: “Other shareholder meetings are like snooze fests, but ours are bangers. I mean, look at this. This is sick.”

Shareholders also re-elected three directors on Tesla’s board and voted in favour of a replacement pay plan for Musk’s services because a legal challenge has held up a previous package.

The vote, analysts have said, is a positive for Tesla’s stock, whose valuation hangs on Musk’s vision of making vehicles drive themselves, expanding robotaxis across the United States and selling humanoid robots, even though his far-right political rhetoric has hurt the Tesla brand this year.

A win for Musk was widely expected as the billionaire was allowed to exercise the full voting rights of his roughly 15 percent stake after the carmaker moved to Texas from Delaware, where a legal challenge has held up a previous pay rise.

The approval comes even after opposition from some major investors, including Norway’s sovereign wealth fund.

Tesla’s board had said Musk could quit if the pay package was not approved.

The vote will also allay investor concerns that Musk’s focus has been diluted with his work in politics as well as in running his other companies, including rocket maker SpaceX and artificial intelligence startup xAI.

The board and many investors who lent their endorsement have said the nearly $1 trillion package benefits shareholders in the longer run, as Musk must ensure Tesla achieves a series of milestones to get paid.

Goals for Musk over the next decade include the company delivering 20 million vehicles, having one million robotaxis in operation, selling one million robots and earning as much as $400bn in core profit. But in order for him to get paid, Tesla’s stock value has to rise in tandem, first to $2 trillion from the current $1.5 trillion, and all the way to $8.5 trillion.

Under the new plan, Musk could earn as much as $878bn in Tesla stock over 10 years. Musk would be given as much as $1 trillion in stock but would have to make some payments back to Tesla.