Introduction

In November 2025, Tesla shareholders approved the largest executive compensation plan in corporate history—a package potentially worth $1 trillion for CEO Elon Musk. The vote was not close. Roughly 75% of shareholders backed the plan at Tesla’s annual meeting in Austin, Texas .

The approval came after weeks of intense lobbying, dire warnings from Tesla’s board about Musk’s possible departure, and fierce opposition from proxy advisory firms. It also came despite Musk’s own history of contentious pay deals—including a 2018 package worth over $50 billion that a Delaware court struck down on governance grounds .

The plan’s structure is unusual even by Silicon Valley standards. Musk receives no salary or bonus. His entire compensation consists of stock awards tied to performance milestones that most analysts consider extreme. If he hits them, he could become the world’s first trillionaire. If he doesn’t, he gets nothing.

Here’s how the plan works, what Musk must achieve, and why shareholders ultimately said yes.

The Deal: 12 Stock Tranches, No Salary

The $1 trillion package is structured as 12 tranches of stock options, each tied to specific performance and valuation targets. Musk must remain CEO for the duration—roughly a decade—to unlock the full award .

To receive the full $1 trillion, Musk must :

• Grow Tesla’s market capitalization from roughly $1.4 trillion to $8.5 trillion—a sixfold increase
• Increase annual earnings roughly 24-fold to $400 billion
• Sell millions of robots and autonomous driving subscriptions

The market cap target of $8.5 trillion would make Tesla roughly three times more valuable than Apple was at its peak. For context, the entire S&P 500 was worth around $50 trillion at the time of the vote. Tesla alone would account for 17% of it.

The plan also includes interim milestones. Earlier tranches can be unlocked at lower thresholds, allowing Musk to receive partial compensation before reaching the full $8.5 trillion valuation. Each tranche that vests increases his ownership stake, potentially reaching as high as 25% of the company .

Why Shareholders Approved It

The vote was widely seen as a referendum not just on Musk’s pay, but on his future at Tesla.

Musk’s Threat to Leave

Musk had warned that if the package was rejected, he would step down as CEO. Tesla’s board amplified this warning. Chair Robyn Denholm told the Financial Times that the share price could collapse without Musk at the helm, and that a package of this size was the only way to motivate “the world’s richest man to put in superhuman effort and achieve ‘impossible things'” .

For many shareholders, the calculation was straightforward. Musk’s other ventures—SpaceX, xAI, Neuralink, and The Boring Company—demand enormous amounts of his attention. Tesla investors feared that without a massive incentive, Musk would gradually disengage from the electric vehicle maker.

The Board’s Argument

Tesla’s board framed the package as purely performance-based. Unlike traditional executive pay, which often rewards short-term stock movements or accounting metrics, Musk’s plan requires extraordinary long-term growth. The board argued that aligning Musk’s incentives with shareholder returns was the best way to ensure Tesla’s future success .

Retail Investor Support

Some prominent individual investors supported the plan. Ron Baron and Cathie Wood of Ark Invest both said they would vote in favor. For retail investors who see Musk as the driving force behind Tesla’s success, the package was a bet that his continued involvement would generate returns far exceeding the dilution caused by the stock awards .

The Opposition: Governance Concerns and Dilution

Not everyone agreed. The plan faced significant opposition from institutional investors and governance experts.

Proxy Advisory Firms Push Back

Both Institutional Shareholder Services (ISS) and Glass Lewis recommended against the package. They criticized its “striking magnitude” and lack of “prescriptive elements” to ensure Musk prioritizes Tesla over his other ventures .

Glass Lewis warned that the payout could be “excessively dilutive” to shareholders if fully enacted . The firm also raised concerns about Musk’s closeness to certain board members, particularly Ira Ehrenpreis, who presided over the governance committee when company bylaws were changed to limit shareholders’ ability to sue for breach of fiduciary duties .

Norway’s Oil Fund

Norway’s sovereign wealth fund, the world’s largest, announced it would vote against the package. The $2.1 trillion fund cited concerns about “the total size of the award, dilution and lack of mitigation of key person risk” .

The Delaware Precedent

The plan’s approval came despite—or perhaps because of—the legal battle over Musk’s previous pay package. A Delaware court had struck down his 2018 compensation deal, valued at over $50 billion, even though Tesla had surpassed the targets set in that plan. The court found that the board was too close to Musk and that the approval process was flawed .

The new package was approved under Texas law, where Tesla is incorporated, potentially insulating it from similar legal challenges.

The Broader Context: Musk’s Compensation History

The $1 trillion package is the latest chapter in a long-running saga over Musk’s compensation.

His 2018 package, worth approximately $56 billion at the time, was designed with similar performance milestones. Musk hit many of the targets, and Tesla’s market cap grew from $50 billion to over $1 trillion. But the Delaware court voided the package in 2024, ruling that the board’s approval process was unfair to shareholders .

Tesla shareholders voted to reapprove the 2018 package in 2024, but the judge upheld her decision. The case was appealed to the Delaware Supreme Court, which in December 2025 reversed the earlier judgments, clearing the way for Musk to receive the $56 billion award .

The $1 trillion package effectively supersedes the 2018 deal. If Musk hits the new milestones, the old package becomes irrelevant.

What Musk Must Do to Earn $1 Trillion

The milestones in Musk’s pay package are extraordinary by any measure. To unlock the full $1 trillion, he must :

Sixfold Tesla’s market cap to $8.5 trillion. This would make Tesla larger than the combined market values of Apple, Microsoft, and Saudi Aramco were at the time.

24x annual earnings to $400 billion. For comparison, Toyota—the world’s most profitable automaker—earned roughly $30 billion in its best year. Tesla’s current earnings are a fraction of that.

Sell millions of robots and autonomous driving subscriptions. The plan explicitly ties Musk’s compensation to Tesla’s success in robotics and autonomy, not just electric vehicles. Tesla has not yet delivered a production humanoid robot or launched a commercial robotaxi service at scale.

Stay as CEO for roughly a decade. The plan vests over 10 years. If Musk leaves, he forfeits unvested tranches.

The targets are designed to be nearly impossible to hit accidentally. They require Tesla to transform from an electric vehicle maker into something fundamentally different—a company that makes robots, runs autonomous fleets, and generates profits at a scale no automaker has ever achieved.

What Comes Next

The $1 trillion package is approved. But the real work—hitting the milestones—has barely begun.

Tesla’s stock has been volatile since the vote. The company faces declining sales in some markets, intensifying competition from Chinese rivals like BYD, and questions about whether its autonomous driving technology is ready for commercial deployment .

For Musk, the package represents both an opportunity and a constraint. He now has a financial incentive to focus on Tesla that rivals the allure of his other ventures. But the milestones are so ambitious that failing to hit them could be seen as a failure even by his own standards.

For shareholders, the vote was a bet that Musk’s continued leadership is worth the dilution. Whether that bet pays off will be determined over the next decade—and the answer depends on whether Tesla can do something no company has ever done before.