Elon Musk’s $1tn pay deal approved by Tesla shareholders

Tesla boss Elon Musk has a record pay package that could amount to almost $1 trillion (£760 billion) approved by shareholders.

The unprecedented deal was approved by 75% of the vote and received thunderous applause from the audience at the firm's annual general meeting on Thursday.

Musk, who is already the richest man in the world, should dramatically increase the electric vehicle company's market value within 10 years. If he does this and achieves various goals, he will be rewarded with hundreds of millions of new shares.

The scale of the potential payout has drawn criticism, but Tesla's board of directors has said Musk could leave the company if it is not approved and that the company cannot afford to lose him.

Following the announcement, Musk took to the stage in Austin, Texas, and danced to chants of his name.

“What we're about to start is not just a new chapter of Tesla's future, it's a whole new book,” he said.

“Other shareholder meetings are a sleep-fest, but ours is just fireworks. Look at this. This is disgusting,” he added.

Milestones Musk must achieve over the next decade to maximize his payout include raising Tesla's market value to $8.5 trillion from $1.4 trillion at the time of writing.

It will also need to put a million self-driving robot taxis into commercial service.

But his early remarks Thursday put the Optimus robot in the spotlight, dashing the hopes of some longtime analysts and Tesla watchers who want Musk to focus on reviving the company's electric vehicle business.

“Let this sink in to where Musk's head is,” analyst Gene Munster, managing partner at Deepwater Asset Management, wrote on X.

“His vision for the 'new book' starts with Optimus. There is no mention of cars, FDS or robotaxis yet.”

Musk later mentioned FSD, short for Fully Self-Driving, saying the company is “almost comfortable” in allowing drivers to “essentially text and drive.”

US Regulators Tesla self-driving feature research following numerous incidents in which vehicles ran red lights or entered oncoming traffic, some of which resulted in accidents and injuries.

Tesla shares were up slightly in after-hours trading, but they are up more than 62% over the past six months.

Sales have fallen in the year since Musk joined US President Donald Trump, a relationship that dissolved last spring.

Tesla shareholder Ross Gerber told BBC News that Musk's salary deal marks “another notch in the incredible things you see in business.”

Musk has made his goals for Tesla clear, but the company faces many challenges, including poor financial performance, said Mr. Gerber, chief executive of investment firm Gerber Kawasaki.

It's unclear whether there will be much demand for humanoid robots, Gerber said. Tesla also faces stiff competition in the robotaxi industry from rivals such as Waymo, he added.

Mr Gerber said his company had recently reduced its stake in Tesla due to concerns about “polarization [Musk's] persona” who “destroyed the value of the brand.”

“Elon seems out of touch with the reality that his public opinion is so low,” he said.

Dan Ives of Wedbush Securities, a technology analyst who has long been a supporter of Musk's leadership at Tesla, called him Tesla's “biggest asset” in a note published after the vote.

“We continue to believe that TSLA assessment is becoming accessible and we believe that the transition to AI-based TSLA assessment over the next 6-9 months has already begun,” Mr. Ives added.

Musk already owned 13% of Tesla shares. Shareholders twice ratified a payout package worth tens of billions of dollars if he achieved a tenfold increase in the company's market value, which he did.

But a Delaware judge rejected that salary agreement on the grounds that Tesla board members were too close to Musk.

Tesla re-registered from Delaware to Texas, and the Delaware Supreme Court is currently reviewing the lower court judge's decision.

The new pay package was rejected by several major institutional investors, including the Norwegian Sovereign Wealth Fund, the world's largest sovereign wealth fund, and the California Public Employees' Retirement System (CalPERS), the largest public pension fund in the United States.

This has made Musk more dependent on Tesla's unusually large number of retail investors.

Musk and his brother Kimbal, who also sits on Tesla's board of directors, were allowed to vote ahead of Thursday's meeting.

Tesla board members have helped lobby for Musk's new pay package in recent weeks with a marketing campaign that has angered some corporate governance experts.

A video posted on voicetesla.com shows chairman Robin Denholm and director Kathleen Wilson-Thompson praising Musk.