Tesla Shareholders Approve Elon Musk's $1 Trillion Pay Package to Secure AI and Robotics Future

Tesla shareholders on Thursday overwhelmingly endorsed a massive pay package for CEO Elon Musk that could reach $1 trillion.

The pay package — designed to ensure Musk's continued leadership at Tesla as the company pursues breakthrough technology in artificial intelligence and robotics — received more than 75 percent support from shareholders, according to a Tesla official at the company's annual meeting.

"I'd like to just give a heartfelt thanks to everyone who supported the shareholder votes," an elated Musk told the gathering. "I super-appreciate it."

Cheers of "Elon" erupted after the vote result was announced at the meeting, which took place at the company's Austin factory.

Musk has become a polarizing figure, partly due to his support of right-wing politicians including President Donald Trump. However, Thursday's vote demonstrated once again the entrepreneurial billionaire's strong influence with investors.

The compensation plan aims to keep Musk at Tesla for at least seven-and-a-half years. It would increase Musk's ownership stake from approximately 12 percent when the package was introduced in September to potentially over 25 percent.

Musk has portrayed Tesla's growth potential as almost limitless, stating in July that it "will be the most valuable company in the world by far" if it achieves planned advances in autonomous driving and AI.

However, Musk himself has suggested he might leave Tesla or reduce his involvement if his ownership share isn't increased enough to give him the influence over the company's future that he desires.

Tesla Chair Robin Denholm, in urging shareholders to support the proposal, argued that retaining Musk was critical to Tesla's future, warning that the company's stock could plummet if he departed.

The board has dismissed criticism that the billionaire's endorsement of controversial political figures has negatively impacted sales.

Tesla investors have consistently supported Musk in previous votes on his compensation packages, including a 2018 deal worth approximately $55.8 billion that has been repeatedly blocked by a Delaware court following shareholder litigation.

After the latest Delaware ruling, Denholm and Tesla's board reconsidered their approach, first approving in August an "interim" compensation award worth about $29 billion for Musk before introducing the larger plan in September.

Once again on Thursday, Tesla shareholders approved extraordinary compensation for Musk and handed the company victories on other key votes, including board member reelections.

Tesla Takedown, an activist group, criticized the vote outcome, highlighting the company's declining auto sales in recent quarters.

"Elon Musk just got one trillion dollars for failure," the group stated, having rallied against the plan Wednesday in downtown Austin.

"Sales are down, safety risks are up and his politics are driving customers away. This isn't leadership — it's the world's most expensive participation trophy."

On the other side, Wedbush analyst Dan Ives said the overwhelming vote in favor of Musk solidifies his position as "the AI Revolution takes hold giving us greater confidence in the Tesla story moving forward."

Musk, with a net worth exceeding $500 billion, is currently the world's richest person, according to Forbes's real-time list of billionaires.

To receive the full compensation package, Musk must achieve 12 milestones related to market capitalization. The first tranche would become available when Tesla reaches $2 trillion in market value, up from its current $1.5 trillion.

The plan also includes a series of operating profit and product goals, such as the delivery of 20 million Tesla vehicles.

The pay proposal was criticized by Glass Lewis and Institutional Shareholder Services (ISS).

In an analysis last month, ISS questioned the rationale for the potential windfall, noting that Musk's financial interests are already closely tied to Tesla's fate.

As structured, the separation of the overall package into tranches of "unprecedented" value "could undermine the necessity for all goals to be realized," ISS stated, also highlighting the lack of explicit requirements that the busy Musk maintain focus on Tesla.