Tesla Shareholders Approve Musk's $1 Trillion Pay Package with 75% Support

This analysis is based on the CNBC report [1] published on November 6, 2025, which covered Tesla’s shareholder vote on Elon Musk’s compensation package. The vote resulted in approval of a historic pay plan valued at approximately $1 trillion, with over 75% of voting shares supporting the measure [1].

The market reaction was notably negative, with Tesla’s stock declining 3.47% on the vote day (November 6) to close at $445.91, followed by an additional 1.92% drop on November 7 to $429.52 [0]. This represents a total decline of 3.68% from the previous close, suggesting investor concerns about the massive dilution potential and ambitious nature of the performance targets [0].

The compensation package consists of 12 tranches of shares to be granted over the next decade, potentially increasing Musk’s ownership from approximately 13% to 25% and adding more than 423 million shares to his holdings [1]. The plan requires Tesla to achieve extraordinary milestones:

• First tranche: $2 trillion (from current $1.38 trillion)
• Final target: $8.5 trillion by 2035, which would exceed the combined market values of Meta, Microsoft, and Google-parent Alphabet [1]

• 20 million vehicle deliveries (versus 8 million delivered to date)
• 10 million active FSD (Full Self-Driving) subscriptions
• 1 million Optimus humanoid robots delivered
• 1 million robotaxis in commercial operation
• Annual adjusted profit targets from $50 billion to $400 billion [1]

Critically, the package includes broad “covered events” provisions that could allow Musk to earn shares even if targets are missed due to natural disasters, wars, pandemics, or changes in regulations [1].

Despite the shareholder approval, there was significant opposition from key governance bodies and major investors:

• Proxy Advisor Opposition
  : Both ISS and Glass Lewis recommended voting against the plan [1]
• Major Shareholder Opposition
  : Norway’s $2 trillion sovereign wealth fund voted against the package, citing concerns about scale and potential risks [2]
• No Time Commitment
  : The plan places no limits on Musk’s political activity or minimum time requirements at Tesla [1]

This vote follows a Delaware Court of Chancery ruling that Musk’s 2018 pay plan was improperly granted and must be rescinded. Musk has appealed, and the matter will be decided by the Delaware State Supreme Court [1].

Tesla’s current market cap of $1.38 trillion [0] would need to grow by over 500% to reach the $8.5 trillion target by 2035 - an unprecedented feat for a company of this size [0][1]. The stock currently trades at an extremely high P/E ratio of 226.06 [0], suggesting already elevated expectations are priced in.

The National Bureau of Economic Research published a paper estimating that Tesla sales would have been 67% to 83% higher without Musk’s “polarizing and partisan actions” [1]. This raises questions about the opportunity cost of Musk’s divided attention across his various business ventures, particularly given the plan’s lack of minimum time commitment requirements.

Tesla faces increasing competition in the EV market from traditional automakers, while its FSD technology faces regulatory scrutiny and safety concerns. The Optimus robots and robotaxis targets involve technologies not yet commercially proven [1], creating significant execution risk for achieving the operational milestones.

The analysis reveals several risk factors that warrant attention:

1. Extreme Valuation Requirements
   : Achieving $8.5 trillion market cap would require unprecedented growth for a company already valued at $1.38 trillion [0][1]

2. Regulatory Risks
   : The “covered events” clause is exceptionally broad and could be subject to legal challenges [1]

3. Execution Risk
   : Many targets (robotaxis, humanoid robots) involve technologies not yet commercially proven [1]

4. Dilution Concerns
   : Adding 423 million shares could significantly impact existing shareholders [1]

5. Leadership Focus
   : The plan lacks minimum time requirements, potentially allowing Musk to focus on other ventures while still qualifying for compensation [1]

• Progress toward operational milestones
• Regulatory developments affecting FSD and autonomous vehicles
• Delaware Supreme Court ruling on previous pay package
• Competitive dynamics in EV and autonomous vehicle markets
• Musk’s time allocation across his various business ventures

Tesla shareholders have approved a $1 trillion performance-based compensation package for Elon Musk with 75% support, despite opposition from proxy advisors and major institutional investors. The plan requires achieving extraordinary market cap growth to $8.5 trillion and ambitious operational targets including 20 million vehicle deliveries and commercial deployment of unproven technologies. The negative stock reaction following the vote suggests market concerns about dilution and execution risks. The plan’s broad “covered events” clause and lack of time commitment requirements raise additional governance questions. Key monitoring factors include regulatory developments, competitive pressures, and the Delaware Supreme Court ruling on Musk’s previous compensation package.