The package, supported by over 75% of investors, is the largest corporate pay agreement in history.

The decision was announced at Tesla’s annual meeting in Austin, Texas, where Musk commended cheers and dancing robots. “What we are about to embark upon is not merely a new chapter of the future of Tesla, but a whole new book,” he told shareholders.

The package is tied to performance milestones rather than a fixed salary. It consists of 12 tranches linked to Tesla’s operational achievements and market valuation. 

To unlock the full payout, Tesla’s market capitalisation must grow from about $1.5 trillion to $8.5 trillion over the next decade. Each milestone gives Musk an additional 1% of Tesla’s stock, meaning he could still secure tens of billions even if he falls short of the final target.

The board presented the package as essential for retaining Elon Musk and ensuring long-term growth. “If completed, these tranches of awarded shares follow strong improvements in revenue growth for Tesla,” said Brian Mulberry, senior client portfolio manager at Zacks Investment Management. 

“Will the growth offset these concerns of dilution, or, is this just giving Elon his wish of enough influence to shape the future of AI? That remains to be seen.”

Not all shareholders were convinced. Norway’s sovereign wealth fund, along with proxy advisory firms Glass Lewis and Institutional Shareholder Services, opposed the plan, calling it excessive. 

Still, supporters argued that Musk’s leadership and vision, ranging from self-driving cars to humanoid robots, remain central to Tesla’s future success.

Tesla Chair Robyn Denholm defended the decision, saying it reflected a turning point for the company. “Tesla is at an inflection point, I think I’ve said that 3,000 times over the last few weeks, and this last year has been a critical one in our history,” she said.

The new pay package replaces Elon Musk’s earlier $56 billion deal from 2018, which was struck down by a Delaware court earlier this year. Since then, Tesla has moved its incorporation to Texas and is appealing the ruling.

During the meeting, Musk outlined a series of upcoming projects, including the production of a steering-less “Cybercab” robotaxi, a new Roadster model, and plans for “a gigantic chip fab” that could involve a partnership with Intel.

He also insisted that the package is less about personal wealth and more about securing enough voting control to drive Tesla’s next phase of innovation.

Shareholders further approved the re-election of three board members, backed annual elections for all directors, and endorsed Tesla’s investment in Musk’s AI startup, xAI. Some abstained, signalling concerns about potential overlap between Musk’s ventures. 

“Many will be looking for the board to provide assurances and convictions that there are guardrails in place to be sure there’s not too much mixing of businesses,” said Jessica McDougall, partner at Longacre Square.

This comes just a day after he floated the possibility of Tesla shareholders voting on whether the automaker should invest in xAI, a change that could increase ties between the two companies without formally merging them. 

“It would be great if Tesla could invest,” he noted earlier, but stressed that shareholder approval would be necessary.

Despite the speculation, Tesla and xAI have yet to issue official statements addressing the merger rumours or clarifying their future relationship.

xAI, Musk’s AI startup behind the controversial Grok chatbot, has grown aggressively since its $33 billion acquisition of X (formerly Twitter) in March 2025. 

That acquisition placed the combined group’s valuation at $80 billion, but sources told Reuters that xAI had discussed valuations as high as $200 billion in its latest funding talks. 

Whether those numbers show the company’s real market potential is still uncertain, as Musk has publicly downplayed suggestions of a fresh capital raise: “We have plenty of capital.”

What is apparent, however, is that xAI is positioning itself as the AI backbone of Musk’s expanding industrial network. Its Grok chatbot has already been deployed in Starlink’s customer support operations, with integration into Tesla’s Optimus robots also on the horizon.

On X, Grok facilitates real-time interactions, further tightening the web of Musk-owned enterprises.

In July 2025, xAI raised $10 billion, half through equity led by Morgan Stanley and half through debt financing. Notably, SpaceX, another Musk company, contributed $2 billion to this round, marking its first known external investment into xAI. 

Reports from The Wall Street Journal indicated that SpaceX’s involvement was part of a $5 billion equity round. 

Operationally, xAI is pushing infrastructure goals. Its Memphis-based supercomputer, Colossus, already runs on over 200,000 GPUs, with plans to scale to one million. The firm is targeting $1 billion in revenue by the end of 2025 and forecasts $19 billion by 2029, supported by an $18 billion investment into its compute backbone.

Despite its commercial momentum, Grok stumbled in July when it produced antisemitic and offensive content, triggering a public apology and a promised codebase review. Still, Musk stands by the chatbot, calling it “the smartest AI in the world” and promising deeper integration across his companies.

From a governance standpoint, merging Tesla, a publicly traded company, with xAI, which remains private, could ignite regulatory challenges. Musk’s current strategy appears to favour operational integration over corporate consolidation. 

Embedding Grok into Tesla vehicles, Optimus robots, and Starlink services could offer the benefits of synergy without the legal complexities of a merger.

For now, Musk says Tesla will not merge with xAI. But as history shows, in Musk’s empire, “no” today doesn’t always mean “never.”

Tesla’s board chair, Robyn Denholm, has urged shareholders to endorse the pay plan, emphasizing the unique contributions of Elon Musk and the need for exceptional incentives to keep him focused on Tesla despite his numerous ventures.

In a letter to shareholders filed with the Securities and Exchange Commission, Denholm noted that typical compensation models do not suit Musk’s extraordinary role, warning that failing to approve the package could drive him to pursue other opportunities. 

“Elon is not a typical executive, and Tesla is not a typical company,” Denholm wrote. “So, the typical way in which companies compensate key executives is not going to drive results for Tesla. Motivating someone like Elon requires something different.”

She highlighted Musk’s achievements and the huge value he has created for Tesla, arguing that the pay package is not just about money but about recognizing and motivating his continued efforts.

Despite Denholm’s appeal, several proxy advisory firms have advised against approving the proposal, pointing to concerns over Musk’s divided attention between Tesla and his other enterprises like SpaceX, Neuralink, and xAI. 

However, early voting trends show a majority of shareholders might back the compensation package, with reports indicating that 80 of early voters are in favour.

Adding to the tension, Elon Musk is seeking to increase his stake in Tesla to 25% to advance his AI and self-driving car vision. 

Currently, he holds about 13% of the company after selling shares to fund his acquisition of X (formerly Twitter). 

Denholm’s letter points to the potential consequences of not approving the package, noting Elon Musk might consider leaving Tesla if the shareholders do not honour their commitment to him.

“We all made a commitment to Elon. Elon honoured his commitment and produced tremendous value for our stockholders. Honouring our commitment to Elon demonstrates that we support his vision for Tesla and recognize his extraordinary accomplishments — this is what will motivate him to continue to create value for stockholders.”

The upcoming vote will determine Elon Musk’s compensation and also his level of involvement in the company.