Tesla Shares Drop 4% Following Approval of Musk’s $1 Trillion Compensation Plan

Tesla (TSLA) shares declined nearly 4% during Friday's trading session, mirroring a broader market downturn. The drop followed Thursday's shareholder meeting, where Elon Musk's ambitious $1 trillion pay package was approved. The compensation plan, tied to Tesla's market valuation and operational milestones, could see Musk receive up to 12 tranches of shares over the next decade if the company hits specific targets.

For the first tranche to vest, Tesla's market capitalization must reach $2 trillion—a significant leap from its current $1.54 trillion valuation. Subsequent payouts are contingent on incremental $500 billion increases, with the full package requiring an $8.5 trillion market cap. The plan also grants Musk additional voting control, further consolidating his influence over the company.

While Tesla's stock initially ROSE after the vote, it quickly reversed gains amid a tech-led sell-off. Investor sentiment soured as markets digested bearish consumer data and questioned the sustainability of the AI investment boom. The University of Michigan's latest consumer sentiment reading added to the downward pressure, casting a shadow over Friday's trading session.