The event
Tesla shareholders recently approved a historic compensation package for Elon Musk: one that could be worth up to US$1 trillion over the next decade, if extremely ambitious performance targets are met.
The targets include boosting Tesla’s market capitalisation to nearly US$8.5 trillion, delivering millions more vehicles, launching robotaxi services, among other moon-shot goals.
Shortly after this approval, Tesla’s shares dropped by about 3–4% over two trading days, and that decline alone trimmed roughly US$10 billion from Musk’s net worth.
Why is the stock falling?
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Timing and optics: The pay-deal vote came at a moment when concerns about Tesla’s growth and market position are mounting — making some investors uneasy that the reward is arriving ahead of clear signs of performance.
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Ambitious goals / dilution risk: The compensation is contingent on extremely aggressive milestones (massive increase in vehicle volume, robot output, market value) which many see as speculative. If the targets are missed, the value of the package (and thus the implied shareholder dilution) becomes a concern.
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Shareholder sentiment / governance concerns: Some major institutional shareholders and proxy advisers opposed the deal, raising red flags about governance, accountability and the magnitude of the award.
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Wealth tied to stock performance: Musk’s net worth is heavily tied to Tesla stock. So a shift in market sentiment or share-price decline translates almost directly into a drop in his wealth.
Impact and implications
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Despite the US$10 billion drop, Musk remains among the richest people in the world — his fortune is still well into the hundreds of billions.
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For Tesla investors, the vote signals strong support for Musk’s leadership and his plan to push toward robotics/AI, not just cars. But it also raises the question: are we paying for results or for ambition?
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The stock drop suggests a moment of investor recalibration: high expectations + big payout = higher risk. If Tesla doesn’t meet those lofty goals, the next few years could bring sharper corrections.
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For governance watchers, the episode underscores tensions between founder-led firms (where leadership is seen as indispensable) and the interests of shareholders who may worry about valuation and accountability.
What to watch going forward
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Tesla’s delivery and profit numbers: Can Tesla scale vehicle production profitably while investing in robotics and autonomy?
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Progress on the ambitious targets: Especially robotaxi deployments, full self-driving subscriptions, global market expansion—these will be key if that US$1 trillion deal is to make sense.
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Market sentiment: Will investors continue to reward visionary bets, or will they demand more concrete results instead of future promises?
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Governance and shareholder reactions: If the promised milestones are delayed or missed, will the next shareholder meeting be more contentious?
In short: The approval of Musk’s mega-pay package marks a bold vote of confidence in his vision, but the immediate stock market reaction suggests that many investors are asking: “Show me the numbers before we get carried away.” Tesla now carries greater expectations — and greater scrutiny — both from its backers and the broader market.
