Tesla stock dropped 4.8% in the U.S. stock market on Thursday, November 6, 2025, as shareholders officially approved a massive new compensation package for CEO Elon Musk. The unprecedented deal could be worth up to $1 trillion if the electric vehicle maker achieves highly ambitious performance targets over the next decade. The vote took place at the company's annual meeting held in Austin, Texas. ### Historic Performance-Based Compensation The newly approved pay package is structured as a performance-based stock option award, not an immediate payout. Elon Musk will unlock portions of the compensation incrementally only if Tesla meets a series of aggressive financial and operational milestones over a 10-year period^{[1][2][3][4][5]}. These targets include a colossal increase in Tesla's market capitalization from its current approximate $1.45 trillion to $8.5 trillion^{[1][2][3][4][6]}. Under the terms, Musk would receive up to about 12% of Tesla's stock, subject to restrictions and the company reaching these ambitious goals^[1]. This includes achieving 20 million vehicle deliveries, deploying 1 million robotaxis for commercial operation, and producing 1 million Optimus humanoid robots^[3][6]. Critics have called the package "unfathomably large," with one expert noting it is "many orders of magnitude beyond what the most overpaid CEO normally makes"^[3]. ### Strong Shareholder Support Despite Opposition More than 75% of Tesla shareholders voted to approve the compensation plan^{[1][2][3][7][4][8][6]}. The overwhelming support came despite opposition from some large institutional investors and proxy advisory firms, who raised concerns about the sheer magnitude of the award and potential dilution for existing shareholders^[7][9]. Tesla's board of directors vigorously campaigned for the package's approval, arguing it is crucial to retain Musk and motivate him to drive the company to new heights^[1][9]. Board Chair Robyn Denholm warned shareholders that Tesla risked losing Musk to his other ventures if the pay plan was not approved^[1]. After the vote, Musk expressed his gratitude, telling shareholders, "I'd like to just give a heartfelt thanks to everyone who supported the shareholder votes"^[1]. He added, "What we're about to embark upon is not merely a new chapter of Tesla, but a whole new book"^[3][6]. ### A History of Contentious Pay Deals This latest approval follows a protracted legal battle over Musk's previous 2018 compensation package. That deal, initially valued at $56 billion, was voided by a Delaware judge in January 2024^[1][4][5]. The judge ruled that the approval process was "deeply flawed" and that Musk had exerted unfair influence over shareholders^[3][4]. Despite the Delaware court's ruling, Tesla shareholders voted to re-ratify the 2018 package in June 2024^[4][10]. However, the Delaware court again rejected the package in December 2024, leading to the proposal of this new, even larger, performance-based award^[4]. Tesla also moved its state of incorporation from Delaware to Texas during this period of legal uncertainty^[7][4]. ### Ambitious Future Goals The targets set for Musk to earn the $1 trillion potential pay are extraordinarily aggressive. They include not only financial milestones but also product development goals, such as scaling up the production of humanoid robots and rolling out a vast robotaxi network^[3][9][6]. Musk highlighted these ventures at the annual meeting, stating that Optimus robots could become Tesla's "biggest product ever"^[3][7]. The company's board believes this unprecedented compensation is necessary to incentivize Musk's continued focus and vision as Tesla navigates a competitive market and expands into new, ambitious technological frontiers. The approval solidifies shareholders' faith in Musk's ability to deliver on these long-term, transformative projects, despite ongoing market volatility and legal challenges. ### Market Reaction and Forward Path The 4.8% drop in Tesla's stock on Thursday reflects market reactions to the news, as investors digest the implications of such a large potential payout and the demanding conditions attached to it. While some analysts anticipate a favorable long-term response from the stock, the immediate reaction indicates a degree of investor caution or profit-taking following the significant vote. The company now faces the challenge of executing on its ambitious targets to justify the historic compensation package and drive future growth.