Tesla investors have signed off a record pay package for Elon Musk, backing the award by roughly 75% at the 6 November AGM in Austin, Texas. The BBC and Reuters both reported the resounding result after weeks of lobbying by Tesla’s board, which warned that failing to approve the plan could risk Musk stepping back. On stage, he thanked supporters and - true to form - turned the meeting into theatre, even dancing alongside the Optimus robot.

This is not a salary. The approved award is a performance deal built around about 423.7 million restricted Tesla shares spread across 12 tranches, equal to roughly 12% of the adjusted share count, according to Tesla’s proxy and SEC filings. Each tranche only becomes earned if Tesla hits a mix of market value, profitability and product targets - and Musk remains in post for multi‑year holding periods.

A technical detail matters for valuation: the grant carries an “offset amount” of $334.09 per share, the Nasdaq closing price on 3 September 2025. At vesting, that offset is netted off (or Musk can pay it in cash), which is why several outlets including Reuters describe the headline $1 trillion figure as about $878 billion net. It is still the largest executive compensation framework ever put to a shareholder vote.

The market targets are steep. Tesla must lift its market value in steps from around $1.5 trillion today to as high as $8.5 trillion, with milestones measured over sustained 30‑day and six‑month averages, per the proxy. Profit hurdles are equally demanding, culminating in adjusted EBITDA of $400 billion for rolling four‑quarter periods. None of this pays out without time‑based vesting of 7.5 to 10 years.

Product goals pull the company far beyond cars. Tesla set milestones including 20 million cumulative vehicle deliveries, 10 million paid Full Self‑Driving subscriptions, one million robotaxis in commercial service, and one million Optimus humanoid robots delivered. TechCrunch and the BBC both noted how Musk framed the company’s future around AI, robotics and autonomy rather than the core EV line‑up.

Regulatory risk remains front and centre. The US National Highway Traffic Safety Administration opened a new probe in October into Full Self‑Driving after reports of red‑light violations and wrong‑lane manoeuvres, building on earlier scrutiny of Autopilot. That sits awkwardly with Musk’s claim at the meeting that Tesla is “almost comfortable” with drivers being able to “text and drive essentially” using FSD - a line that will be read closely in Washington and by insurers.

The split between retail and institutional voters was stark. Norway’s $2.1 trillion sovereign wealth fund (NBIM) and CalPERS said they would vote against, echoing proxy advisers ISS and Glass Lewis. Yet the company’s unusually large base of retail holders helped carry the day, amplified by a VoteTesla.com campaign fronted by chair Robyn Denholm and director Kathleen Wilson‑Thompson. Business Insider described the xAI item as a non‑binding signal; the board said it would examine a potential Tesla investment in Musk’s AI firm.

On governance, this is a live test case. Chancellor Kathaleen McCormick of Delaware’s Court of Chancery voided Musk’s 2018 package; Tesla then reincorporated in Texas and asked shareholders to approve this new structure. The Delaware Supreme Court heard arguments on the 2018 case on 21 October 2025. However that appeal lands, Thursday’s vote gives Tesla a fresh, board‑approved framework with clearer disclosure - and a far bigger swing at AI‑driven value.

Voting power is the other moving part. The proxy shows Musk and his brother Kimbal, a director, were entitled to vote their shares under Texas law. If all tranches were ultimately earned and vested, various filings suggest Musk’s stake could move towards the mid‑20s as a percentage, though the award uses a voting agreement that nets off unearned shares pro‑rata until milestones are hit. For current holders, that means potential dilution alongside a stronger founder influence - by design.

The near‑term share count mechanics are complex. Shares linked to the award are issued after HSR clearance and the shareholder approval, but Musk only reaps economic benefit if operational and valuation goals are met and he serves through the vesting windows. The offset amount can be settled in cash to reduce net new shares or via net settlement in stock; either way, investors should expect accounting charges and dilution scenarios to feature in coming filings.

Strategically, Musk is doubling down on Optimus and robotaxi. Analyst Gene Munster noted on X that he led with the robot rather than cars; Wedbush’s Dan Ives argued the vote “unlocks” an AI‑driven valuation for TSLA over the next year. The delivery math still matters: Europe saw sharp declines earlier this year, while Tesla’s own update showed a Q3 rebound to 497,099 deliveries. If those AI products slip, the award’s moon‑shot design becomes a larger risk factor.

For UK readers, two threads stand out. First, global norms on pay and control: this dwarfs even the largest FTSE awards and will fuel stewardship debates from London to Oslo. NBIM’s opposition underscores how big public funds are thinking about dilution and key‑person risk. Second, portfolio reality: many UK savers hold Tesla via index trackers, so Thursday’s vote affects them indirectly. Expect City governance teams to study the offset mechanics and the voting agreement closely.

Shares were modestly firmer in after‑hours trade after the vote, Reuters noted, and are up by roughly half over six months. The next catalysts are legal - the Delaware appeal - and strategic: board deliberations on any Tesla investment in xAI, regulatory outcomes on FSD, and whether Optimus can move from stage demo to factory utility at scale. If execution matches the rhetoric, the prize is vast. If not, the dilution math will do the talking.

One final practical note for investors: Thursday’s vote approved structure, not cash in Musk’s pocket. Every tranche requires Tesla to hit and then sustain targets over years. That long fuse should concentrate minds on whether AI and robotics can justify an $8.5 trillion valuation case - and whether the board can evidence the discipline to say no if milestones slip.