Just now, Musk won the most lucrative salary package in history.
A CEO incentive plan worth nearly trillions of dollars was passed with over 75% approval at Tesla’s just concluded 2025 shareholder meeting.
The atmosphere on site was high, comparable to a concert, with shareholders shouting “Elon! Elon!” in unison. Musk received cheers when he took the stage and even danced with Tesla robots for a while.
Of course, just taking money is not enough, Musk also has to draw a few cakes for shareholders.
He predicted on stage that Optimus robots could increase the global economy tenfold, be stronger than the best surgeons, and even eliminate poverty and provide top-notch medical services.
Another big news is that Tesla’s steering wheel free autonomous vehicle Cybercab is expected to be mass produced in April next year.
What else did the shareholders’ meeting pass besides the compensation plan?
The agenda of this shareholders’ meeting is quite dense, and the voting results for key proposals are as follows:
Elected directors: Ira Ehrenpreis, Joe Gebbia, and Kathleen Wilson Thompson
Approve the 2024 executive compensation plan (advisory vote)
Approve funding to replace Musk’s 2018 compensation plan
Approve Musk’s new compensation plan worth $878 billion
Remove the requirement for a super majority vote from Tesla’s bylaws and rules
Shareholder proposal: Authorize Tesla to invest in xAI
(Passed, but with a large number of abstentions)
Shareholder proposal: Linking executive compensation to sustainable development and human capital goals
Shareholder proposal: Abolish the 3% shareholding rule for derivative litigation
Shareholder proposal: Election of all directors annually
Shareholder Proposal: According to Texas law, it is required to obtain shareholder approval before amending certain provisions of the company’s articles of association
Regarding the advisory vote on Tesla’s investment in Musk’s AI company xAI, the Tesla board of directors stated, “As this is an advisory vote, the board will further evaluate the follow-up actions based on the current level of shareholder support
By the way, according to Reuters’ analysis, although this year’s compensation plan may grant stocks worth up to $1 trillion over the next 10 years, the cost of these stocks will be deducted at the time of grant, so for Musk, the actual value is slightly lower, about $878 billion.
So, what exactly is going on with this $878 billion incentive plan?
To be clear, this is not a salary that Musk will receive immediately. Specifically, Musk is expected to receive 423.7 million shares of stock rewards, which will be unlocked in 12 stages. If Tesla can still achieve the corresponding profit or operational goals after completing each market value target, he can obtain about 1/12 of the shares.
To obtain this nearly trillions of dollars, Musk had to complete a series of tasks that could be considered ‘impossible’:
Tesla needs to soar from its current $1.4 trillion to $8.5 trillion.
What concept? It is about 1.85 times the current highest market value of Nvidia.
The goal of the first stage is to achieve a market value of $2 trillion (currently around $1.4 trillion). In the next nine stages, for every $500 billion increase in market value, a portion can be unlocked. In the last two stages, for every $1 trillion increase, the ultimate goal is a market value of $8.5 trillion.
In addition, in order to receive this new salary, Musk also needs to complete a series of operational KPIs:
Delivery of 20 million Tesla vehicles
Successfully obtained 10 million active subscribers for FSD (fully autonomous driving)
Deliver 1 million Optimus robots
Realize the commercial operation of 1 million Robotaxis
We still need to achieve a series of adjusted EBITDA benchmarks, ranging from $50 billion to $400 billion
Of course, even if Musk achieves his goal, he cannot cash out immediately. These shares have two key attribution time points: spring 2032 and autumn 2035. And even if the shares are owned, they still need to be held for another five years before they can be sold.
In addition, this plan also provides Musk with a “guarantee”: even in the event of force majeure such as natural disasters and wars, he can still obtain a portion of the shares. More importantly, although the shares have not yet fully belonged to him, as long as the goal is achieved, Musk will immediately obtain voting rights.
And the right to vote precisely exposes Musk’s true intentions.
After all, many people don’t understand why Musk still insists on pursuing this trillion dollar salary when he is already the world’s richest man?
As mentioned above, if this compensation plan is fully implemented, Musk will receive an additional 423.7 million shares of Tesla stock, and his shareholding ratio will soar from the current 13% to 25%.
And this 25% is what he really wants – control over Tesla.
However, the Tesla board of directors is also aware that no company should rely on one person forever. Tesla is actually preparing for the ‘post Musk era’.
To obtain the final 70 million shares of stock, Musk must first establish a CEO succession mechanism. This can also be considered as providing Tesla with a ‘double insurance’.
What level of CEO annual salary does Musk have?
Even without considering the $1 trillion plan, Musk’s lifetime salary has already far exceeded that of other executives.
According to Equilar’s analysis data, since 2006, Musk’s lifetime compensation (including salary, bonuses, benefits, and the value of redeemed stocks and exercised options) has been several times or even dozens of times that of other CEOs.
The salary plan just approved by Musk is worth almost the annual gross domestic product (GDP) of Poland, which has a population of 36 million, and twice the GDP of Bangladesh, which has a population of 174 million.
As the world’s richest man, Musk’s net worth has approached $500 billion. The emergence of this new salary plan is largely due to the previous salary plan being rejected by the court.
The compensation plan worth approximately $56 billion in 2018 was deemed “excessive, inappropriate, and must be revoked” by Justice Kathaleen McCormick of the Delaware Court of Chancery.
The reason is that the judge found that Musk had too much control in the salary negotiations and the board did not provide shareholders with the necessary information. This really infuriated Musk. Tesla even attempted to get shareholders to “retroactively approve” the plan, but Judge McCormick directly ruled that this vote could not make up for the previous procedural flaws, and in December last year, the original ruling was upheld.
At present, the case is still under appeal in Delaware, and Musk’s options are still pending.
No matter how loud the opposition is, it cannot compete with a 75% approval rating
Although it ultimately passed with over 75% support, the vote was far from as easy as it seemed.
The Norwegian sovereign wealth fund (the world’s largest sovereign wealth fund) has previously stated that it will vote against the compensation plan.
Although they acknowledge Musk’s visionary role in the company’s development, they are concerned about the overall scale of the reward program, believing that it has failed to alleviate the company’s over reliance on individuals.
This is already the second time that the Norwegian sovereign fund has opposed Musk’s compensation plan. Previously, they also voted against the $56 billion plan.
Tesla’s two major shareholders, Glass Lewis and ISS, also suggest investors reject the compensation plan, believing that the amount is too high and will dilute shareholder value. ISS stated in a statement, “Although the core purpose of this reward is to retain Musk, there are no explicit terms in the plan that guarantee he will actually do so
Regarding this, Musk angrily criticized ISS and Glass Lewis during last month’s earnings call, calling them “corporate disruptors”.
In addition to doubts from institutional investors, Tesla’s own strategic planning has also sparked controversy.
Tesla released the fourth part of its “Grand Plan” in September this year, claiming that it is a blueprint for how the company can achieve “sustainable prosperity” through its products in the future. However, compared to the first three ‘Grand Plan’, the fourth one appears particularly hollow.
Every previous article has listed specific goals and actionable ideas, and the third “Grand Plan” released in 2023 is even a 41 page white paper focused on building a sustainable energy economy.
In the face of criticism from die hard fans, Musk himself acknowledges that the criticism is reasonable and stated that Tesla will provide more details. But two months have passed and this plan has not been modified to date.
However, in this vote, supporters believe that Musk is the only person who can transform Tesla from a “car selling company” to an “AI+robotics giant”. Without him, Tesla could have become a mediocre electric vehicle manufacturer, with its market value cut in half sooner or later.
In the end, Tesla tied him to the ship with nearly a trillion dollars.
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