Shareholders Approve Musk’s $1 Trillion Ownership, Sparking Discussion on Governance and Innovation

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Shareholders Approve Musk’s $1 Trillion Ownership, Sparking Discussion on Governance and Innovation

Bitget-RWA2025/11/07 00:16

By:Bitget-RWA

- Tesla shareholders approved a $1 trillion compensation package for Elon Musk, granting him up to 25% ownership if performance targets like $8.5 trillion market cap and 20M annual vehicle deliveries are met. - The 12-tranche plan faced criticism from major institutional investors over excessive dilution, lack of safeguards, and Musk's growing external ventures, despite retail investor support. - Governance experts warned of "key person risk" as Musk's stake increases, while supporters argue his leadership

On Thursday, Tesla shareholders gave the green light to a landmark $1 trillion pay package for CEO Elon Musk, solidifying his leadership at the company and sparking renewed discussion about executive compensation and board oversight, according to

a CNBC report

. More than 75% of investors supported the measure, which could boost Musk’s ownership to 25% of

Tesla

if he achieves a series of demanding goals related to market value, vehicle output, and advancements in artificial intelligence.

The compensation plan, divided into 12 segments, requires Tesla to hit targets such as an $8.5 trillion market cap—over five times its current $1.5 trillion—and annual vehicle deliveries of 20 million,

Livemint reported

Shareholders Approve Musk’s $1 Trillion Ownership, Sparking Discussion on Governance and Innovation image 0

Musk, who presently holds a 13% stake in Tesla, stands to gain another 12% through this arrangement, further increasing his influence and decision-making authority, particularly as Tesla expands into robotics and AI. The board maintains that this package is essential to keep Musk at the helm amid fierce competition in emerging tech, cautioning that losing him could destabilize the company.

While retail investors largely backed the plan, it faced pushback from major institutional shareholders, such as Norway’s $2 trillion sovereign wealth fund and California’s CalPERS pension fund,

TimesNow reported

. Detractors raised issues about significant dilution, insufficient performance checks, and Musk’s expanding political and business interests. Norges Bank Investment Management, Tesla’s sixth-largest institutional investor, labeled the package “unreasonable” and stressed the importance of managing “key person risk.” Proxy advisory firms Glass Lewis and Institutional Shareholder Services also urged shareholders to reject the plan.

Musk’s reach goes beyond Tesla, as he leads SpaceX,

xAI

, and Neuralink, and is active in U.S. political circles. Supporters, including Tesla Board Chair Robyn Denholm, argue that his diverse leadership is vital for Tesla’s progress. “Elon is the ultimate ‘key man’ of key man risk,” said Ron Baron, a major Tesla supporter. However, governance specialists like Nell Minow have criticized the setup, pointing out Musk’s “part-time CEO” role due to his many outside commitments.

This approval comes as Tesla navigates a turbulent market. The company’s shares have climbed 14% this year, helped by Musk’s $1 billion stock buy and optimism about AI-driven expansion, a

Blockonomi analysis

observed. Analysts such as Wedbush’s Dan Ives described the vote as opening a “new chapter” for Tesla, highlighting its

physical AI edge

in self-driving technology and robotaxis. Nonetheless, the company still faces hurdles, including falling car sales in recent quarters and increased regulatory attention over safety concerns.

The compensation package also contains clauses for “covered events” like pandemics or regulatory changes, which could let Musk receive shares even if operational goals aren’t met. Critics say this flexibility weakens accountability. Meanwhile, Tesla’s board is still dealing with legal challenges over its 2018 pay plan, which a Delaware court found was improperly approved.

As Tesla looks ahead, this decision highlights the ongoing tension between bold leadership and traditional governance standards. With Musk’s ownership set to rise, the company’s challenge will be to balance breakthrough innovation with shareholder expectations in the coming years.

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Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.

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