On the Dash:
- Shareholders will decide whether to approve Musk’s unprecedented $878 billion compensation plan tied to Tesla’s market and operational goals.
- The proposal could expand Musk’s ownership stake to 25% if Tesla meets targets up to an $8.5 trillion valuation.
- Additional votes will determine changes to Tesla’s governance, including an xAI investment and a shift to simple majority voting.
Tesla shareholders will cast a high-stakes vote Thursday at the company’s factory in Austin, Texas. This vote will decide whether to approve a pay package worth up to $878 billion for CEO Elon Musk, making it the largest executive compensation deal in history. The decision could redefine Tesla’s leadership structure, future investments, and governance policies.
The proposed plan would grant Musk as many as 424 million additional Tesla shares, potentially boosting his ownership from 15% to roughly 25%. The package is divided into 12 tranches of stock that unlock only when Tesla reaches specific financial and operational goals, including market capitalization targets ranging from $2 trillion to $8.5 trillion. Notably, Tesla’s current market value stands at $1.5 trillion.
To earn the full award, Tesla must hit key profit metrics, starting with an adjusted EBITDA of $50 billion and ultimately achieving $400 billion in annual adjusted EBITDA. Last year, Tesla posted $16 billion in adjusted Ebitda, down from a peak of $19 billion in 2022.
Operationally, the plan requires Tesla to deliver 20 million vehicles over the next decade, deploy 1 million robotaxis, and expand its Full Self-Driving (FSD) subscriptions to 10 million users. The company also aims to commercialize humanoid robots known as Optimus, though that effort remains in its early stages.
While some large investors, including Norway’s sovereign wealth fund, have opposed the deal, calling it excessive, supporters argue that Musk’s targets are so ambitious that shareholders will benefit greatly if he succeeds. The Tesla board has warned that Musk could walk away if the package is rejected.
Beyond Musk’s compensation, shareholders will vote on several other proposals that could reshape Tesla’s corporate direction. These include a potential investment in Musk’s artificial intelligence startup, xAI; replacing Tesla’s supermajority voting rule with a simple majority standard; and adopting a political neutrality policy. The board has not endorsed the xAI investment or the neutrality measure, citing possible conflicts and sufficient existing safeguards.
The vote comes as Tesla seeks to maintain its edge amid growing global competition and scrutiny of Musk’s leadership across his multiple ventures. With Musk’s net worth exceeding $450 billion, he remains the world’s richest individual, driven largely by his holdings in Tesla and SpaceX. The results of the shareholder vote are expected later Thursday afternoon.
