Understanding Tesla's Shareholders Meeting in One Article: Musk Wins the "Trillion-Dollar Bet"

Source: Tencent Technology, Translation: Wuji

On November 6th, Eastern Time, Tesla held its annual shareholders meeting at the Gigafactory in Austin, Texas. Based on onsite and pre-vote counts, shareholders approved a new round of CEO compensation incentives for Elon Musk with over 75% support—a performance-based betting plan with a potential value approaching $1 trillion.

The approval means that if Musk achieves the set market capitalization and operational milestones over the next ten years, he will gradually earn approximately 423.7 million restricted stock units (RSUs), with a theoretical value potentially reaching about $1 trillion; if the targets are not met, the rewards will expire.

Image: Tesla shareholders meeting现场

Market reactions were swift, with Tesla’s stock price rising over 3% after hours. The market generally viewed this approval as a confirmation of the company’s leadership stability and an indication that investors are willing to continue betting on Musk’s long-term vision.

01 Details of the Betting Agreement: Twelve Phases, Targeting an $8.5 Trillion Market Cap

This compensation plan is essentially a ten-year performance betting agreement.

According to the board, the core elements are:

• Grant Size: Musk will be granted 423.7 million RSUs, accounting for about 12% of the adjusted share capital.
• Vesting in Phases: 12 tranches, each requiring simultaneous achievement of market cap thresholds and at least one operational or financial goal.
• Market Cap Goals: Starting from approximately $1.5 trillion, with a final target of $8.5 trillion. Each phase requires the company’s market cap to increase by roughly $500 billion to $1 trillion.
• Performance Goals: Including delivering 20 million cars cumulatively, reaching 10 million active FSD (Full Self-Driving) users, commercializing 1 million Robotaxis, delivering 1 million Optimus robots, and achieving an annual adjusted EBITDA of $400 billion (verified over four consecutive quarters).
• Protection Clauses: Market cap must be maintained above the threshold for three consecutive months; performance targets must be met for four consecutive quarters; if Musk departs, unvested portions will expire.
• Comparison to 2018 Plan: The new plan is a comprehensive upgrade in scale and goals, extending beyond financial metrics to AI and robotics industries, with more long-term and strategic challenges.

Tesla Chairman Robyn Denholm wrote in a letter to shareholders: “This is not just an incentive plan, but a contract for the future. Retaining Musk is key to Tesla’s ongoing innovation.”

02 Major Proposals: Musk Receives 208 Million Shares of Incentives

Tesla announced at the shareholders meeting that nearly all proposals were voted on according to the board’s recommendations. Specific results include:

• Re-election of Directors: Ira Ehrenpreis, Joe Gebbia, and Kathleen Wilson-Thompson were re-elected.
• Unconditional Share Grants: After exhausting employee stock reserves and temporarily freezing employee compensation, Musk was granted 208 million common shares with no conditions attached.
• Rejection of Sustainability and Child Labor Audits: Shareholders voted against related audit proposals.
• Maintaining Shareholder Liability Restrictions: Shareholders decided to keep the current rule that, unless holding over 3% of shares (worth over approximately $44 billion at current prices), they cannot sue management for breach of fiduciary duty. Some shareholders voiced protests at the meeting, shouting “Shh,” indicating dissatisfaction with their voting rights being limited.

There was a clear divergence between shareholder votes and board recommendations on several proposals:

• Annual Director Elections: Shareholders voted to re-elect all directors annually.
• Maintaining a Two-Thirds Supermajority: Shareholders voted to continue requiring a 2/3 supermajority for passing proposals, making it harder for shareholders to influence decisions—especially when diluting their own holdings to grant Musk more shares. Achieving such a majority would be nearly impossible unless all shareholders united against Musk.
• xAI Investment Not Authorized: Shareholders did not authorize the board to assist Musk’s private AI company, xAI (though the vote was more than 50% in favor, with a high abstention rate). Since this was an advisory vote, the board will consider the results before deciding on next steps.

Most voting results aligned with the board’s recommendations, with some shareholders voicing protests against the restrictions. Ultimately, most shareholders chose to uphold current governance rules, further concentrating control among a few—including Musk.

This means that most shareholders effectively sacrificed their voting power, consolidating control in the hands of a small group including Musk.

03 Rights and Responsibilities: Not All About Musk’s Glory

One proposal that drew attention was the continued restriction on shareholder liability—aimed at restoring shareholders’ ability to sue Tesla’s management and board.

This proposal seeks to reverse a change made after Tesla moved its headquarters to Texas, which limited derivative lawsuits by shareholders.

Thomas DiNapoli, Comptroller of New York and trustee of the New York State Common Retirement Fund, publicly supported the proposal.

He stated: “Since Texas allowed this, the new bylaws have almost prevented all investors from filing derivative lawsuits unless they hold over 3% of shares. This means only Musk and a few large Wall Street funds can act independently, leaving the board almost unaccountable.”

DiNapoli added: “Tesla claims this rule is to prevent frivolous lawsuits, but courts already have tools to dismiss such cases. These bylaws hinder effective oversight and make shareholders feel the board is no longer accountable. Our proposal is simply to abolish this clause, restore accountability, and ensure investors can protect the company’s long-term value.”

He further pointed out that this is just one part of Tesla’s governance issues: “The board lacks independence, allowing the CEO to manage multiple external companies, and proposing a plan that could award over $1 trillion and expand control further. These problems stem from the fundamental issue: the board’s failure to independently oversee management.”

DiNapoli summarized: “Tesla is changing the world through innovation, but without accountability, no company can thrive long-term. Strong governance protects investors and enhances long-term competitiveness.”

04 Voting Dynamics: Institutional Divisions, Retail Investors Decide

The shareholder meeting also highlighted the ongoing issue of shareholder liability restrictions.

Pre-meeting disclosures showed that Musk and his trusts held about 14% of shares; major institutional shareholders included Vanguard, BlackRock, Morgan Stanley (Counterpoint Global), and Fidelity.

Norway’s Government Pension Fund Global (NBIM) and CalPERS explicitly voted against the proposal, but their combined holdings were limited. Proxy advisory firms ISS and Glass Lewis recommended voting against, citing governance risks and dilution concerns.

However, the decisive votes came from retail investors, with surveys indicating over 70% of retail shareholders supported the compensation plan.

Analysts suggest that retail investors’ “emotional trust” was a key factor—they see backing Musk as a bet on Tesla’s future.

05 Musk’s Wealth and the Power Struggle Behind Compensation

According to Bloomberg’s Billionaires Index, Musk is currently the world’s richest person, with a net worth of about $473 billion. The approval of this plan could make him the first individual to join the “Four Comma Club”—wealth exceeding $1 trillion.

In the first half of the year, Tesla’s revenue declined, and some protesters even demonstrated outside showrooms, criticizing his role in US government cuts to foreign aid and public spending.

In response, Musk has framed his strategy as a “future narrative”: shifting Tesla’s focus to humanoid robots (Optimus) and Robotaxi autonomous taxis, aiming to create new growth beyond electric vehicles.

However, both projects are still in R&D—Robotaxi still requires safety drivers, and robots are not yet available for orders.

On social platform X, Musk’s supporters—from retail investors to Silicon Valley VCs—are urging others to vote “Yes.” Their common message: “Musk’s compensation depends on making Tesla more valuable.”

Tesla’s investor relations page states: “This compensation plan aims to ensure Elon’s time, energy, and talent are focused on Tesla long-term, creating extraordinary value for shareholders.”

Per the agreement, Musk must remain CEO for the next 7.5 years to gradually vest his shares. He can continue leading SpaceX and xAI concurrently.

However, the plan remains controversial among institutional investors. The Norwegian Sovereign Wealth Fund voted against, citing concerns over “excessive rewards, significant dilution, and lack of risk mitigation for key personnel.”

Market expectations were high—Polymarket, a prediction platform, showed a 93% chance of approval before the meeting.

Musk emphasized that this isn’t about money, but control: “If I really build a huge army of robots, could I be ousted by the board someday? That’s what I worry about most.”

“If I can’t maintain enough control, I wouldn’t dare build such a robot army,” he said.

To achieve these goals, Musk faces unprecedented challenges. The compensation plan also requires him to “develop a CEO succession plan,” though no specific timeline is set—implying he must prepare for succession. Musk and his brother Kimbal Musk recused themselves from the board vote to avoid conflicts.

Currently, Musk directly owns about 411 million shares, roughly 13% of Tesla’s total; including family trusts and related holdings, his influence approaches 14%.

06 Market Reactions and xAI Investment: Trust Vote and New Variables

Following the vote results, analysts generally see “the biggest uncertainty lifted.”

Morgan Stanley’s latest report called the outcome a “trust vote in Musk,” which could boost market confidence in the short term.

But governance risks remain a concern. Norges Bank, CalPERS, ISS, and Glass Lewis reiterated worries that such a large incentive plan would further concentrate power and weaken board independence.

Meanwhile, Tesla’s other proposal—investing in xAI—has yet to be finalized.

A Tesla spokesperson said that while most shareholders support investing in Musk’s AI company, “a significant number chose to abstain.” The company will “study next steps” to determine how to proceed, meaning the xAI proposal, though approved by a majority, still requires further review and is not yet final.

07 Conclusion: The Beginning of a Trillion-Dollar Gamble

This shareholders meeting not only determined Musk’s compensation but also set the course for Tesla’s next decade.

Through this plan, Musk’s personal fate is deeply tied to the company’s growth; meanwhile, shareholders face a choice between potential trillion-dollar dilution and a broader vision for the future.

As one analyst put it: “This isn’t just a vote about money, but about faith and the future.”

Whether Musk can deliver on this “Mars-scale betting” will be the true test for Tesla over the next ten years.