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 reported that Tesla shareholders approved CEO Elon Musk’s unprecedented $1 trillion performance-based compensation package with over 75% voting support at the company’s annual shareholder meeting in Austin, Texas [1][2][3].

Tesla’s stock declined significantly following the announcement, closing at $445.91 (-3.54%) on November 6, 2025 [0]. The stock notably underperformed broader market indices, with the S&P 500 declining 0.99%, NASDAQ falling 1.74%, and Dow Jones dropping 0.73% [0]. The Consumer Cyclical sector, where Tesla operates, was among the worst performers with a -2.14% decline [0]. Trading volume surged to 104.87 million shares, significantly above the average of 86.91 million shares [0], indicating heightened investor activity and potential repositioning following the vote outcome.

The approved package consists of 12 tranches with escalating milestones [1]:

• First tranche: $2 trillion (current market cap: $1.44 trillion) [0][1]
• Next nine tranches: $500 billion increments up to $6.5 trillion
• Final two tranches: $1 trillion increments to $8.5 trillion

• 20 million vehicle deliveries (current: ~8 million delivered) [1]
• 10 million FSD subscriptions
• 1 million Optimus robots delivered
• 1 million robotaxis in commercial operation
• Annual adjusted profit targets from $50 billion to $400 billion [1]

The package includes controversial “covered events” provisions allowing Musk to earn shares without meeting operational targets due to natural disasters, wars, pandemics, regulatory changes, or governmental action affecting product design, manufacturing, or sales [1]. Reuters previously reported that Musk could receive over $50 billion by hitting just a handful of more attainable goals [1].

Major proxy advisors ISS and Glass Lewis recommended voting against the package [1][3], raising significant governance concerns. This vote follows a Delaware Court of Chancery ruling that Musk’s 2018 pay plan was improperly granted and must be rescinded, with Musk appealing to the Delaware State Supreme Court [1].

During the same meeting, Musk announced several strategic initiatives that could impact Tesla’s future trajectory:

• Optimus Production
  : 1 million-unit production line at Fremont, expanding to 10 million units at Giga Texas [1]
• Cybercab Production
  : Beginning April 2026, with testing in Miami, Dallas, Phoenix, and Las Vegas [1]
• Roadster Unveiling
  : Scheduled for April 1, 2026 (April Fools’ Day) [4]

Shareholders also voted on a proposal for Tesla to invest in xAI, Musk’s AI startup. While more votes supported than opposed the measure, significant abstentions occurred, and the board will “examine next steps” [1][5]. This raises potential conflict-of-interest concerns given Musk’s leadership of multiple competing ventures.

A National Bureau of Economic Research paper published last month estimated Tesla sales would have been 67-83% higher from October 2022 through April 2025 without Musk’s “polarizing and partisan actions” [1]. The new plan places no limits on his political activities or minimum time commitment to Tesla, representing a significant governance risk.

: The $8.5 trillion market cap target represents a nearly 500% increase from current levels, requiring unprecedented growth in an increasingly competitive EV market [0][1].

: Current vehicle deliveries (~8 million) need to increase 150% to meet the 20 million target, while FSD, Optimus, and robotaxi goals remain largely unproven technologies [1].

: Musk’s voting power increasing to ~25% raises concerns about shareholder rights and potential conflicts of interest, especially given his leadership of multiple competing ventures (xAI, SpaceX, Neuralink) [1][5].

: The outcome of Musk’s appeal regarding the 2018 pay plan could set important precedents for executive compensation governance and potentially affect the current package’s validity [1].

: Tesla’s potential investment in xAI could face regulatory scrutiny given the interconnected nature of Musk’s business empire [1][5].

Despite the 75% approval, proxy advisor opposition and the stock’s negative reaction suggest institutional investors may have concerns about the package’s governance implications [1][3]. The underperformance relative to broader markets indicates investor skepticism about the plan’s feasibility and governance implications [0].

• Vote Outcome
  : 75% shareholder approval for $1 trillion pay package [1]
• Stock Performance
  : -3.54% decline vs. S&P 500 -0.99% [0]
• Market Cap Target
  : $8.5 trillion (current: $1.44 trillion) [0][1]
• Vehicle Delivery Target
  : 20 million (current: ~8 million) [1]
• Voting Power Increase
  : From 13% to 25% [1][4]

1. Delaware Supreme Court Ruling
   : Timeline and potential impact on executive compensation governance
2. Production Milestones
   : Quarterly progress toward 20 million vehicle delivery target
3. Technology Development
   : FSD subscription growth, Optimus robot deployment timeline, Cybercab production launch
4. Market Cap Progress
   : Quarterly tracking toward $2 trillion first tranche target
5. xAI Investment Decision
   : Board’s final determination and potential regulatory implications
6. Competitive Landscape
   : Market share dynamics against traditional automakers and EV competitors

The analysis reveals several risk factors that warrant attention, particularly regarding the extremely ambitious performance targets and governance concerns surrounding this compensation package [0][1]. The “covered events” clauses that allow payouts even if targets are missed represent a notable departure from standard executive compensation practices and should be carefully considered in investment analysis.