Tesla Shareholder Approval of Musk's $1 Trillion Pay Package: Market Impact Analysis

This analysis is based on the CNBC report [1] published on November 6, 2025, which reported Tesla shareholders’ approval of Elon Musk’s compensation package with over 75% voting in favor.

Tesla’s stock showed significant negative reaction despite the shareholder approval, declining 3.47% on November 6 to $445.91 and an additional 3.68% on November 7 to $429.52 [0]. This 7% two-day decline suggests investor concerns about dilution and the ambitious nature of the targets outweigh the positive signal of shareholder support. Trading volumes surged during the vote period, with 109.6 million shares on November 6 and 103.5 million shares on November 7, compared to the average 87.8 million shares, indicating significant investor positioning around the event [0].

The approved package includes 12 tranches of stock options tied to extremely ambitious milestones [1][3]. The package could reach $1 trillion in total value and would increase Musk’s ownership stake from approximately 13% to 25% of the company [1][3]. The market capitalization targets range from $2 trillion for the first tranche (Tesla’s current market cap is $1.38 trillion) to $8.5 trillion by 2035 for the final tranche [1][3]. Operational targets include 20 million vehicle deliveries, 1 million Optimus humanoid robots delivered, 1 million robotaxis in commercial operation, and annual adjusted profit targets from $50 billion to $400 billion [1][3].

Despite shareholder approval, significant governance concerns remain. Major proxy advisors Glass Lewis and ISS recommended voting against the package [1]. The Delaware Court of Chancery previously voided Musk’s 2018 pay package, with an appeal currently pending before the Delaware Supreme Court [3]. The package lacks limits on Musk’s political activity or minimum time commitment to Tesla [1], raising questions about executive focus given his multiple ventures.

The compensation targets appear extraordinarily ambitious relative to Tesla’s current position. The $8.5 trillion valuation target requires Tesla to become worth over 6x its current value in 10 years [1][3]. Tesla’s current annual revenue is approximately $97.76 billion (FY2024), while the final annual profit target of $400 billion represents 95x the current quarterly adjusted EBITDA run rate of $4.2 billion [0][1]. The requirement to deliver 1 million Optimus robots is particularly challenging given that no Optimus robots are currently market-ready [1][3].

The package aligns CEO incentives with long-term transformation beyond automotive and may prevent Musk from leaving for other ventures [1][3]. However, adding 423 million shares could significantly dilute existing shareholders [1]. The current P/E ratio of 226.06 [0] already reflects high growth expectations, making the additional dilution particularly concerning for current investors.

The pending Delaware Supreme Court ruling on the previous pay package appeal creates significant legal uncertainty [3]. If the court upholds the previous decision, it could set precedent for challenging the current package. Additionally, regulatory approvals for robotaxi deployment in new cities remain uncertain [3].

Investors should be aware of several risk factors that may significantly impact outcomes:

1. Achievability Risk
   : The $8.5 trillion valuation and operational targets appear potentially unachievable within the specified timeframe [1][3]
2. Execution Risk
   : No Optimus robots currently market-ready, yet 1 million units are required [1][3]
3. Legal Risk
   : Delaware Supreme Court could reverse the package, creating uncertainty [3]
4. Dilution Risk
   : Adding 423 million shares could significantly impact existing shareholders [1]
5. Focus Risk
   : No minimum time commitment requirements for Musk across his multiple companies [1]

• Quarterly progress reports on each milestone category
• Delaware Supreme Court ruling on previous pay package appeal
• Competitive developments in autonomous driving and robotics
• Musk’s time allocation across SpaceX, X, xAI, Neuralink, and Boring Company [1]
• Regulatory approvals for robotaxi deployment in new cities [3]

Tesla shareholders have approved an unprecedented compensation package for Elon Musk that could reach $1 trillion in value, increasing his ownership from 13% to 25% [1][3]. The package includes 12 tranches tied to ambitious targets including $8.5 trillion market cap by 2035, 20 million vehicle deliveries, 1 million Optimus robots, and annual profits up to $400 billion [1][3]. Despite over 75% shareholder support, the stock declined 7% over two days following the announcement, reflecting investor concerns about dilution and target achievability [0]. The package faces legal challenges from the Delaware court system and governance concerns from major proxy advisors [1][3]. Current Tesla metrics include a $1.38 trillion market cap, P/E ratio of 226.06, and approximately $97.76 billion in annual revenue [0].