Elon Musk’s Ultimatums: In recent filings and press reports, Tesla’s board revealed that Musk repeatedly warned he might quit if his demands weren’t met. According to Tesla’s proxy disclosure, Musk told directors he would “pursue other interests and leave Tesla” unless he was guaranteed at least a 25% voting stake and full payment of his disputed 2018 award . Media reports similarly note Musk publicly threatened to quit or spin off Tesla projects if denied greater control . (He had made related comments as early as January 2024, saying he might take Tesla’s robotics/AI work “outside of Tesla” absent more voting power .) In sum, Musk has pressed the board for more shares and compensation, even floating an exit strategy if he is not satisfied .
Proposed Compensation Plans: To address Musk’s demands and retain him, Tesla’s board has unveiled two big pay proposals. In early August 2025, the board approved an “interim” stock award: 96 million new Tesla shares (worth about $29 billion at current prices) to be paid as long as Musk stays in an executive role for two years, subject to a five-year holding period and a $23.34 exercise price (the same as his 2018 grant) . Importantly, these 96M shares will be forfeited if Delaware courts end up reinstating Musk’s voided 2018 award, avoiding a “double dip” . The board cast the interim grant as a “good-faith” down-payment on the massive 2018 plan that courts had struck down .
On September 5, 2025, Tesla filed details of an even larger 10-year package for shareholder approval. Dubbed a “Super Ambitious” incentive plan, it would grant Musk up to ~12% of Tesla’s stock (roughly 400+ million shares) if he hits a series of demanding milestones over 10 years . This award is structured in 12 tranches tied to aggressive targets (e.g. raising Tesla’s market capitalization from today’s ~$1.1 trillion to about $8.6 trillion in a decade) . Musk would receive the same 96M shares immediately (as above) plus additional grants upon meeting milestones, potentially boosting his ownership to about 25% . There is no fixed daily time commitment requirement in the plan, but Musk must remain an executive for at least 7–7.5 years to vest all tranches . In sum, the proposed 2025 plan eclipses even the 2018 deal: it is pegged at roughly $1.03 trillion in value if all targets are met, making it by far the largest CEO pay award ever .
【28†】 Figure: Tesla’s market value (red bars) soared from ~$74 billion in 2019 to over $1.3 trillion by 2024, roughly tracking EV deliveries (black). By 2025 it has settled near $1.09 trillion【28†】.
2024 Shareholders’ Vote: At the June 2024 annual meeting, Tesla shareholders already weighed in on Musk’s pay legacy. Tesla’s proxy results show that stockholders overwhelmingly approved ratifying Musk’s 2018 CEO stock option award and all other board-sponsored proposals . Reuters reported that even critics conceded this was a sign of Musk’s retail backing (“a big thumbs-up” to his leadership) . However, the June 2024 vote did not end legal disputes: Delaware courts have kept the 2018 grant void despite the shareholder vote, and Tesla’s appeal of that decision is ongoing .
Governance Proposals: The 2024 meeting also saw major governance changes. Several stockholder-sponsored resolutions passed by wide margins over management’s opposition. Notably, shareholders approved (1) shortening director terms from three years to one year, and (2) moving to a simple majority vote standard for corporate actions . Tesla’s board had recommended against both, but investors overwhelmingly backed them . (Tesla’s official release confirms these proposals succeeded .) These votes mean future Tesla boards will face annual elections and lower hurdles for shareholder proposals, aligning Tesla’s governance more with typical companies.
Board and Investor Reactions: The special compensation committee (led by chair Robyn Denholm and Kathleen Wilson-Thompson) has defended the new pay deals. They argue Musk’s unique role in Tesla’s future (especially in AI/robotics) justifies bold incentives. Chair Denholm told media the board had lengthy negotiations (37 meetings with lawyers, 10 with Musk) and crafted the package “with an eye on keeping Musk in place” . The board’s proxy literature stresses that other boards could not handle a CEO “like Musk” with standard packages .
Among investors, reactions are mixed. Major institutional shareholders (Vanguard, BlackRock, State Street) have not publicly announced their votes on the new plan yet . Notably, Vanguard and BlackRock supported Musk’s original 2018 plan last year, whereas State Street’s funds voted against it . Retail and founder-aligned shareholders have tended to back Musk’s compensation deals. Several public pension funds and unions are opposing the $1T plan; for example, the New York State Comptroller issued a statement calling the sequence of pay packages a “bait-and-switch” to “pull the wool over shareholders’ eyes,” and is urging investors to reject the 3% ownership threshold bylaw that insulates the new deal .
Legal and Regulatory Implications: Legal experts note Tesla’s 2025 deals exploit recent shifts in Delaware and Texas law. Tesla reincorporated in Texas in 2024, and Texas law is far more “management-friendly.” Under Delaware law, Tesla had barred Musk from voting his shares on the 2018 package to limit shareholder suits; in Texas, Musk is allowed to vote his ~13% stake on the new plan . Texas also permits companies to set ownership thresholds for lawsuits; Tesla enacted a bylaw requiring 3% holdings to sue (Musk alone meets that at 13%, and the large passive funds do too) . These changes make it much harder for aggrieved investors to challenge the pay plans in court. Indeed, Reuters notes that under Texas law the plan is unlikely to be struck down, and being able to vote his shares will “lock in approval” for Musk . Nonetheless, the old litigation continues: the Delaware Court of Chancery’s 2023 ruling voiding the 2018 award is on appeal, and Musk’s lawyers have filed briefs seeking reversal . If the appeals court eventually reinstates any of the old awards, Tesla’s special committee has pledged to cancel overlapping new grants so Musk can’t be paid twice .
Market and Media Reaction: Financial markets have reacted positively to the news that Tesla and Musk’s future leadership were effectively secured. On the announcement days in early August and early September, Tesla’s share price jumped ~2–3% . For example, one report notes shares rose ~3.6% after the $1T proposal was filed, a modest bounce given the stock had been down ~13% year-to-date . Some analysts view the developments as removing a major overhang. Garrett Nelson of CFRA said the vote clears “a major overhang on the shares” and signals that shareholders are willing to reward Musk for meeting ambitious goals . Others warn of a potential “sell-the-news” effect after such large gains in anticipation.
Commentators, however, are divided. Supporters argue the massive incentives reflect how critical Musk is to Tesla’s success (particularly in robotics and AI) . Critics counter that the packages are wildly excessive and pose governance risks. Tesla pundit Dan Coatsworth quipped that in just a few weeks Tesla’s board went from worrying “if Elon Musk is a liability…to saying ‘pick a number, any number’ to lock him in” . Environmental, social and governance (ESG) analysts question the optics of such outsized pay: one investor noted that while the plan might gain votes, it “raises larger social questions about the outsized gains going to relatively few” shareholders, a model unlikely to be sustainable . Others observe Tesla’s fundamentals: declining EV sales in China, rising competition, and a tarnished brand (partly from Musk’s political activism) mean the company may not truly merit a sky-high valuation regardless of this deal .
In sum, the latest developments—Musk’s demands, the board’s compensation proposals, shareholder votes, and legal maneuvering—have generated intense debate. For investors and analysts, the key questions are how these deals will affect Tesla’s capital structure and control, whether Musk will remain focused on Tesla or be distracted by other ventures, and ultimately whether the promised future growth (and astronomical valuation targets) can be delivered. Many will be watching the actual November 2025 shareholder vote and any legal rulings closely, since the outcome could significantly influence Tesla’s governance and stock trajectory 【28†】.
Sources: Tesla SEC filings and press releases ; Reuters news reports ; media commentary from FT/WSJ/Reuters; filings from Tesla’s 2025 proxy and related SEC 8-K disclosures. All citations appear as referenced above.