The Journal. - Tesla Gives Elon Musk a $1 Trillion Pay Package

Episode Date: November 7, 2025

Shareholders at Tesla approved the most valuable pay package ever for Elon Musk in an effort to bring his attention back to the company. The CEO will have to hit a number of milestones to get the full value of the package, including shifting Tesla’s focus to developing robotaxis and humanoid robots. WSJ’s Becky Peterson breaks down the complicated plan with Jessica Mendoza. Further Listening:  Why GM Is Slamming the Brakes on EV Ambitions Why Elon Musk’s AI Chatbot Went Rogue Tesla Has a Problem: Elon Musk Sign up for WSJ’s free What’s News newsletter.  Learn more about your ad choices. Visit megaphone.fm/adchoices

Welcome back to Texas, the home of Tesla. At Tesla headquarters in Austin, Texas, shareholders gathered yesterday for their annual meeting. It was a pretty flashy affair. Our colleague Becky Peterson covers Tesla, and she watched a live stream of the event. There was a group of invited shareholders at Tesla's Austin, Texas. this gigafactory, and there was a stage set up with a bunch of blue and pink lights everywhere. Two of Tesla's humanoid robots called Optimus danced on opposite ends of the stage. The main question at the meeting was whether shareholders would approve a new pay package for Musk,

worth $1 trillion. It's definitely record-setting. I don't think the world has any trillionaires. And why would Tesla shareholders want to give Musk this much money? Primarily, they were trying to solve the problem of Elon being distracted by other companies. And we all saw earlier this year, he went to Washington, D.C. and worked on Doge. Then he spent summer, really focused on XAI. The board has said explicitly, this package is designed to keep his attention.

And that to keep his attention, he has to try to achieve a goal. no one else could do. At yesterday's meeting, shareholders approved the package by a wide majority. With over 75% voting in favor, approved. Elon Musk came on stage. He danced a little bit. The optimist robot started dancing, and it was this whole scene where he got to thank the crowd for passing his new pay package.

I super appreciate it. Thank you, everyone. But Musk doesn't get that trillion dollars on day one. Instead, it's tied to the company hitting so-called moonshot business goals, including growing Tesla into an $8.5 trillion company. I guess what I'm saying is hang on to a Tesla stock. Welcome to The Journal, our show about money, business, and power.

I'm Jessica Mendoza. It's Friday, November 7th. Coming up on the show, another record-breaking pay package for Elon Musk. Thursday's vote Thursday's vote is not the first time that Tesla shareholders have approved a major pay raise for Musk. In 2018, he was awarded a multi-billion dollar pay package, but a shareholder filed a lawsuit in Delaware, saying that the approval process was flawed because of Musk's influence over the board. That case wound its way through the courts for years. And in the beginning of 2024, the Delaware transitory court judge

decided that the package was not fair to shareholders and rescinded it. According to a decision in a Delaware court, the Tesla chief executive's record-breaking $56 billion, yes, $56 billion pay award will not be reinstated. Tesla tried to get around that decision last year. They held a new shareholder vote on the same 2018 package, asking shareholders, if you could give it to him again, would you? It was basically like a popularity contest. It didn't have any sort of legal status.

It didn't do anything to give him the package back. Musk never received that full package, though the board has given him a third of the shares as the court case continues. The way that they see it, Musk hasn't been paid since then, since that pay package was canceled. And while that's still going through the appeal process in court,

they were trying to solve the problem of our CEO hasn't been paid. The record-setting pay package is also meant to get Musk's attention. The billionaire spent the first part of the year leading the Department of Government Efficiency. And more recently, he's focused on. focused on his artificial intelligence company, X-A-I. Meanwhile, Tesla hasn't been getting a lot of love from Musk. He spent a lot of time this summer at X-A-I, as we reported,

Tesla people would have to go to the X-A-I offices for their meetings. People in this universe know that he's splitting his time, and even the board says, like, they're not actually asking for time. What they're asking for is, like, his energy and his devotion and his, like, interest in the success of the company. which seemed to be waning for a lot of the last year. And what is that meant for Tesla? Like, how is the company doing?

The first half of the year was really hard on Tesla sales. And I reported on this a lot. There was a lot of controversy. People were sort of boycotting the company. People were protesting the company. Tesla owners were putting bumper stickers on their car saying, like, I bought this before Elon went crazy. There was a massive rebellion against the brand,

and we saw that in the sales numbers. In the first half of the year, sales fell more than 13% globally. Tesla's profit also slid 71% in the first quarter of this year. But the company has somewhat bounced back as customers rushed to buy cars ahead of the end to EV subsidies in the U.S. In the run-up to the vote, some big shareholders expressed their opposition to such a huge, huge pay raise for Musk.

There were a few shareholders who came out against the pay package before the vote. One was Norway's public pension fund. They answer to the people of Norway, and they have maybe slightly different values than other Tesla shareholders. But a lot of the U.S. public pension funds also came out against it. Maybe he is the visionary that the board thinks he is, but we don't know what could happen to anybody. That's an executive from California State Pension Fund. And if it is so key on just one person, key person risk, you know, that's a worry for me as a shareholder.

Musk threatened to leave Tesla if the pay package didn't get approved. In response to a post on X criticizing the plan, he pointed out how valuable Tesla is compared to other car companies. And he wrote, quote, which of those CEOs would you like to run Tesla? Why is Musk so valuable? Like, is he really the only person who can lead Tesla? That's how they see it.

Tesla's in a unique situation compared to other publicly traded companies in that more than 30% of its shareholders are retail investors. So these are just individuals who are putting their money in. A lot of times putting all of their money in. And they're really excited by it. They believe in Musk, the man. They believe in his company. and in a lot of cases, you know, he can't do any wrong.

Yesterday, 75% of the Tesla shareholders who voted cast a yes on the pay package. And unlike the last pay package, this one probably won't get snarled up in court. That's because Tesla relocated its headquarters to Texas. And so the company isn't under the jurisdiction of that Delaware court anymore. But for Musk, there's a long road to a trillion dollars. what he has to do and what it means for the future of Tesla is next.

Musk's new pay package is made up of chunks of stock and to get each one he has to reach certain targets. The board says, goals that would require him to actually create operational growth. So he has to grow Tesla's profits and he has to grow its sales of a few key products. And so does he have to, like, practically speaking, how does it work? Like, does he have to hit all the goals at once? Is there an option

to choose which goals he wants to hit at any given time? And what does he get for each goal achieved? It's almost like a video game. that's a great way to think about it the package is divided into 12 tranches each of the 12 tranches is tied to a market cap goal to unlock a tranche of shares Musk needs to grow Tesla's market cap

by $500 billion or more and also hit one of a series of sales milestones which include delivering 20 million cars selling a million robots and getting a million robotaxies on the road the final goal is to get Tesla to that $8.5 trillion dollar valuation over the next 10 years.

If Musk does that, he gets to level up his voting power from 15% to 25%. He's already the largest shareholder in the company. Just big picture, stepping back, what does the future of Tesla look like as far as Musk is concerned? If he's successful,

robots will be ruling the world. And I think the idea is that humanoid robots will supercharge the economy and there will be so much wealth creation that humans won't need to work and will all just live as like very wealthy people in an economy that's supported by humanoid robots. With AI and robotics, you can actually increase the global economy by a factor of 10 or maybe 100. There's not like an obvious limit. That's obviously not what our world looks like right now. And he, at Tesla, in particular, would be building these robots that are, you know, able to move

around, work in factories, take care of babies. This is how he's described it. And he has started referring to this as his robot army. I mean, I guess a guy with that many kids could use a robot army. I don't know. Yeah, most people don't need as many babysitters. Totally. Have you used or interacted with any of these robots? robots at this point? When the board was promoting the pay package, they brought an older version of Optimus to New York's Times Square. And I stood in line and got handed a Snickers bar as part of their like Halloween candy moment. But this was an older one. So it's not like

the most up-to-date technology. But like it was a little clunky. And it was also teleoperated by someone behind the scenes and you could hear a little bit of like the gears churning and then I stuck around and got to watch it leave its post and it walks

like two inches at a time but then when they demoed the robots on stage last night dancing it moved a lot more like a human than the one that I saw in Times Square I guess dancing is the first step and then you can start cleaning Do electric cars play a role in Musk's vision for Tesla at all besides the robotaxies?

He just doesn't think people will be using cars the way that they do now. The cars that they have in the lineup, like for the future, don't have steering wheels, don't have pedals, don't have side mirrors. Like, he's not designing cars that people are buying today. So, again, to hit these goals. the world is going to have to change a little bit. It's worth noting, it's not guaranteed that Musk will actually get the whole trillion dollars from this package. Becky spoke to Tesla's board chair, Robin Denholm, about this. She emphasized that these are moonshot goals.

They're meant to be very difficult. And she said people are talking about it as if he's going to succeed, but she doesn't know that he will succeed. And if Musk isn't, able to hit the milestones, what does that mean for Tesla? It's a smaller company. 8.5 trillion dollar market cap

is still extraordinary. Yeah, it's a big number. I think Nvidia just hit 5 trillion. It's a big number. Like, they could land, as they say with moonshots, they could land among the stars and still have grown quite a bit.

So after the meeting, Musk posted on X, quote, time to pull all. lot of rabbits out of the hat. What do you take that to mean? Oh, no. He doesn't think he can do it. It's funny to me because I listen to him talk every quarter. He paints a picture and he sells shareholders on a vision of the future. And it always seems like he can't do it. And then, oh my God, suddenly he does it. Amazing. Where he gets credit is for like coming up with the vision and for encouraging people to help his companies actually reach these unbelievable goals.

So this is another example of that. These goals would be transformational for Tesla. There's no guarantees, but now he's incentivized to try. Additional reporting in this episode by Teo Francis, Emily Glazer, Berber Gin, Alexander Saidi, and Gareth Vipers. The Journal is a co-production of Spotify and The Wall Street Journal. The shows made by Catherine Brewer, Pia Gidcari, Rachel Humphreys, Isabella Jopal, Sophie Codner, Ryan Knutzen, Matt Kwong, Colin McNulty, Annie Minoff, Laura Morris, Enrique Pores-Silarosa, Sarah Platt, Alan Rodriguez Espinosa, Heather Rogers, Pierce Singhi, Jivica Verma, Lisa Way, and. Catherine Whalen, Tatiana Zemise, and me, Jessica Mendoza. Our engineers are Griffin Tanner, Nathan Singapok, and Peter Leonard.

Our theme music is by So Wiley. Additional music this week from Catherine Anderson, Peter Leonard, Bobby Lord, Emma Munger, Nathan Singapok, and Blue Dot Sessions. Fact-checking this week by Mary Mathis. Thanks for listening. See you on Monday.