Tesla's Board of Directors has proposed a performance-based compensation package for CEO Elon Musk that could be worth nearly $1 trillion if all targets are met, with the shares to be distributed in 12 tranches over a 10-year period.
The plan, which requires shareholder approval at the November 6 annual meeting, is designed to retain Musk and incentivize him to achieve ambitious growth and operational milestones, including reaching an $8.5 trillion market capitalization, delivering 20 million Tesla vehicles, launching 1 million Robotaxis, and achieving $400 billion in adjusted EBITDA profit.
Robyn Denholm, Tesla's Chairwoman, stated the package aims to keep Musk "motivated and focused on delivering for the company" and emphasized that his compensation is tied directly to performance, not guaranteed.
"Mr. Musk is independently wealthy and has consistently demonstrated that he is motivated by more than just conventional forms of compensation. Rather, he is driven by bold, high-stakes challenges that allow him to fundamentally reshape industries and society, while maximizing long-term shareholder value," the company's board said in a statement. "The Special Committee believes that retaining and incentivizing Mr. Musk as Chief Executive Officer at this pivotal moment is essential to Tesla’s successful transition from its role as a leader in the EV and renewable energy industries to growing into a leader in AI, robotics and related services."
The total value of the package is estimated at $975 billion based on maximum payout, with the potential to reach approximately $1 trillion if all performance targets are achieved.
The first tranche requires Tesla to reach a $2 trillion market cap, with subsequent milestones increasing by $500 billion per tranche, culminating in the final $8.5 trillion target.
Operational milestones include the delivery of 1 million Optimus robots, 10 million active Full Self-Driving (FSD) subscriptions, and the commercial operation of 1 million Robotaxis.
To earn the final two tranches, Musk must participate in developing a long-term CEO succession framework approved by the board, and he must remain at Tesla as either CEO or an executive officer responsible for product or operations for at least 7.5 years.
The package is a response to a Delaware Chancery Court ruling that voided Musk’s 2018 $56 billion pay plan, which was deemed improperly granted and excessive Tesla has appealed the decision, and the company recently awarded Musk an interim $29 billion stock award.
The proposal also includes a separate shareholder vote on whether Tesla should invest in Musk’s artificial intelligence venture, xAI, at the same meeting.
“Elon earns nothing under the 2025 CEO Performance Award until he meets a series of incredibly ambitious market capitalization AND operational milestones," If he succeeds, Tesla will become the most valuable company in history – with an $8.5 trillion market cap – and shareholders will benefit from incredible growth and value creation.”
Denholm reiterated in a statement that retaining and incentivizing Musk is fundamental to Tesla achieving its goal of becoming the most valuable company in history.
