Tesla shareholders approved a conditional pay award for Elon Musk on 6 November, with more than 75% of votes cast in favour at the annual meeting in Austin. The package, framed as a long‑term, performance‑based equity grant, is unprecedented in size and will only vest if demanding targets are achieved. Preliminary results were announced from the stage immediately after the vote.
Under the 2025 CEO Performance Award, Musk receives no salary. Instead, up to 12 tranches of restricted stock may vest over a decade if both valuation and operational milestones are met. The market‑capitalisation thresholds escalate from $2 trillion through to $8.5 trillion, paired with goals including 20 million vehicles delivered, one million robotaxis in commercial operation, one million Optimus humanoid robots delivered, and sustained adjusted EBITDA rising to $400 billion on a four‑quarter basis.
Vesting is staged with long holding periods intended to align incentives, and unearned shares lapse at the end of the term. The award’s structure and definitions, including treatment of adjusted EBITDA and service requirements, are set out in Tesla’s preliminary proxy materials circulated ahead of the meeting.
The vote comes after a turbulent legal backdrop. In January 2024, Delaware’s Court of Chancery rescinded Musk’s 2018 options award, finding the process conflicted and not entirely fair; in December 2024 it declined to modify that remedy notwithstanding a subsequent shareholder ratification vote. The Delaware Supreme Court heard the appeal on 15 October 2025, with judgment pending.
Tesla is no longer a Delaware corporation. Shareholders approved a move in June 2024 and the company completed a conversion to Texas corporation status the same day. In March 2025, the Delaware court confirmed that the reincorporation complied with corporate law. Governance of future awards is therefore under the Texas Business Organizations Code.
Major institutions split on the new award. Norway’s sovereign wealth fund (Norges Bank Investment Management) and CalPERS both announced votes against, citing scale, dilution and key‑person risk, while proxy advisers ISS and Glass Lewis recommended rejection. The board campaigned heavily for approval in the run‑up to the meeting.
If all tranches are earned, Tesla’s filings indicate Musk’s voting power could approach 25% on the new award alone and up to about 28.8% when combined with the disputed 2018 award. The proxy details a proposed grant of roughly 423.7 million restricted shares (about 12% on an adjusted basis), with proportional voting arrangements for unearned shares.
From a corporate‑governance standpoint, the vote tests investor tolerance for exceptional, founder‑centric pay in exchange for stated retention and strategic focus. The board argues the structure is pay‑for‑future‑performance; opponents frame it as excessive and power‑concentrating. How the Delaware appeal is resolved will continue to influence perceptions of board process quality.
Regulatory risk remains a parallel consideration. In October 2025, the U.S. National Highway Traffic Safety Administration opened a new evaluation into Full Self‑Driving (Supervised) covering nearly 2.9 million vehicles, following reports of traffic‑signal violations and crashes. Earlier, NHTSA had pressed Tesla over the adequacy of its 2023 Autopilot recall remedy.
Strategically, Musk highlighted AI and robotics, including Optimus and future robotaxi services, as central to value creation-an emphasis echoed in the performance milestones themselves. The approved award therefore ties executive pay directly to execution in these regulated, capital‑intensive areas rather than to vehicle sales alone.
For asset owners and corporate governance teams, immediate practical work includes modelling potential dilution across tranches, re‑assessing control thresholds in boardroom scenarios, and tracking any conditions that could delay vesting. Final vote tallies and any award agreements will be disclosed via subsequent SEC filings, which will determine effective dates and accounting treatment.
Two tracks now run in parallel: implementation of a Texas‑law, performance‑based award approved on 6 November, and a Delaware appeal on the now‑rescinded 2018 plan. The outcome of the Supreme Court case, together with the NHTSA’s safety investigations, will shape the governance and regulatory environment in which Tesla seeks to meet its new targets.