Elon Musk officially awarded $1 trillion pay package despite intense backlash: '[It's] pay for unchecked power, not pay for performance'

Tesla CEO Elon Musk received approval from Tesla investors for a pay deal that could total $1 trillion, reported Bloomberg.

What happened?

At Tesla's yearly investor gathering in Austin, Texas, over three-quarters of ballots cast favored the compensation plan. Brandon Ehrhart, the company's general counsel, shared the vote tally with attendees, who responded with applause.

The plan allows Musk to earn stock awards if Tesla achieves certain business benchmarks and valuation thresholds over the next 10 years. His share of the automaker could expand to at least one-quarter of the company.

"It's not just a new chapter for Tesla; it's a new book," Musk said at the meeting, per Bloomberg.

For Musk to collect the full compensation, Tesla needs to achieve goals such as reaching an $8.5 trillion valuation and completing objectives such as selling 20 million cars and signing up 10 million people for autonomous driving features. Meeting every benchmark would give Musk Tesla shares with a combined value of nearly $2.4 trillion.

Why is Tesla's executive pay package troubling?

This compensation approval comes as Tesla's automobile sales have dropped for two years in a row. While management wants to boost manufacturing by 50% before 2027, buyers may wonder whether the company will focus on better vehicles and lower prices.

Critics have objected to the payout. New York State Comptroller Thomas DiNapoli called the compensation "pay for unchecked power, not pay for performance," per Bloomberg.

The enormous executive payout might limit Tesla's ability to make electric vehicles more affordable for typical customers. If EVs become pricier or the company reduces investment in developing new models, fewer people may switch from gas-powered transportation.

Investors also cast ballots on whether Tesla should put money into xAI, Musk's separate artificial intelligence business. Although more people voted in favor than against, numerous shareholders declined to vote either way, prompting board members to say they'll discuss what happens next, per Bloomberg.

What can I do about corporate compensation practices?

If you worry about how companies you buy from spend their money, research their business decisions before purchasing products.

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Look into alternative electric vehicle makers that might provide similar options. Many car manufacturers now sell EVs across a range of budgets.

You can contact elected officials to advocate for rules requiring companies to operate transparently. Pushing for regulations that protect buyers and encourage ethical business behavior holds corporations accountable.

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