Tesla shareholders approve Elon Musk's trillion-dollar payday

Tesla shareholders have approved a record-breaking compensation package for CEO Elon Musk - a deal that could make him the world's first trillionaire.

The performance-based stock award, announced in a September SEC filing, ties Musk's payout to ambitious goals that redefine the future of electric vehicles, AI, and robotics.

Yet, as the world's richest person is set to become even richer, questions over CEO-to-worker pay disparity remain.

What are the terms of Elon Musk's Tesla pay package? 

Musk, who receives no salary from Tesla, will only unlock the award if he remains CEO through 2035 and hits these targets:

• Increase Tesla's market value to US$8.6 trillion
• Scale annual vehicle production from under 2 million to 20 million cars
• Deploy 1 million robotaxis and 1 million humanoid robots

Tesla's special board committee defended the package, calling Musk "a magnet for talent" and essential to the company's transformation into a leader in AI and robotics.

Investor backlash and shareholder vote

Opposition to the pay package was mounting.

Major investors including Norway's sovereign wealth fund and proxy advisers Glass Lewis and Institutional Shareholder Services (ISS), which owns Money, urged for a vote against.

During Tesla's annual shareholder meeting, activist investor John Chevedden called the plan "outrageous", criticising Musk's many "distractions" and calling Tesla directors "lap dog enablers".

Despite this, more than 75% of shareholders backed the package.

Musk responded to the announcement: "I super appreciate it."

The history behind Musk's compensation drama

This isn't Musk's first controversial pay deal. In 2018, Tesla shareholders approved what was then the largest executive award in US history-worth over US$50 billion.

ISS opposed it, warning that Musk could unlock billions even without positive earnings.

That deal was later challenged in court.

In January 2024, the Delaware Court of Chancery ruled the vote was "not fully informed" and rescinded the package.

Musk called the ruling "absolute corruption" and threatened to shift Tesla's AI and robotics efforts elsewhere.

Why Tesla's board says Musk is irreplaceable

In its latest filing, Tesla's board repeated its 2018 rationale: retaining Musk is critical. 

"This award is a first step toward keeping Elon's energies focused on Tesla," the committee told shareholders.

"Through Elon's unique vision and leadership, Tesla is transitioning ... to becoming a leader in AI, robotics and related services.

"To be clear, losing Elon would not only mean the loss of his talents but also the loss of a leader who is a magnet for hiring and retaining talent."

But Musk's portfolio is broader than ever.

He now leads SpaceX, Neuralink, Starlink, X (formerly Twitter), a generative AI company, forays with cryptocurrencies, and a new political movement called the America Party.

His public feud with US President Donald Trump over government spending has sparked protests outside Tesla stores, some ending in torched cars.

The timing of the pay deal is also striking. Tesla faces serious headwinds:

Sales down: 31% in California, 43% in Europe, 29% in China

Stock down: Tesla shares have lost a third of their value in 2025

Competition rising: BYD has overtaken Tesla on revenue, while Alphabet's Waymo leads in autonomous driving

In Australia, Tesla deliveries rose 9% in May year-on-year - but that followed steep declines of 76%, 53%, and 72% in earlier months.

Is Elon Musk trillion-dollar pay worth it? 

The vote came amid growing wealth and income inequality in Australia and globally.

A University of Melbourne study found the average ASX-listed CEO earns 103 times more than the average Australian worker. Globally, the gap is even wider:

Japan: 59:1

US: 269:1 (skewed by ultra-high earners like Musk)

Sweden: Preferred ratio is just 2:1

Across all countries, the trend was clear: people want the gap to be smaller.

Yet with Musk - if he achieves his many goals - the pay disparity has never been larger.

If Musk earns his full compensation, the CEO-to-worker pay ratio at Tesla would be 6,250,000:1.

That's based on Tesla's average worker salary of US$160,000, according to Levels.fyi.

A trillion US dollars - one million millions - is enough to buy Switzerland or give nearly $40,000 to every Australian. It's the largest equity award in corporate history.

Despite the controversy, three-quarters of Tesla shareholders said yes.

Whether that's the price of innovation or a symbol of runaway inequality, the world is watching.

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