Tesla is looking to introduce a new compensation plan for CEO Elon Musk, who might still be the wealthiest person globally.
This new package, set to be discussed at the annual shareholders meeting in November, proposes around 423 million shares contingent on hitting specified milestones over the next ten years.
Based on Tesla’s current stock valuation, this could be valued at about $145 billion. However, to activate this contract, Musk will need to grow the company’s market valuation in the electric vehicle (EV) sector to an astounding $8.5 trillion, which would mean a pay package nearing $1 trillion.
Presently, Tesla’s valuation stands at roughly $1.1 trillion, making the board’s ambitious targets seem even more extraordinary when compared to the largest current companies—like Nvidia, which is valued around $4 trillion.
Additionally, Tesla must attain 10 million subscriptions for autonomous driving, deliver 20 million vehicles, and produce 1 million robots, along with launching 1 million Robotaxis to secure Musk’s potential payday.
The committee’s reasoning places Tesla’s proposal within a broader context focused on advancements in artificial intelligence (AI). While Tesla has traditionally focused on EVs, its growing emphasis over recent years on AI and robotics is notable.
The special committee believes that failing to provide Musk with incentives might risk not just his leadership but could also drive away talent in the AI sector—it seems Musk has been a vital factor in attracting skilled professionals to Tesla.
Musk, who also manages SpaceX, X, and Neuralink, noted that if an agreement on this new compensation package isn’t reached, prioritizing other projects could become more likely.
His previous compensation plan from 2018 is still under litigation, following the board’s announcement in August of a $29 billion stock award described as “good” payments.
This prior agreement, much like the new proposal, required Musk to meet specific goals. Once these benchmarks were met, he was set to gain a package worth around $56 billion.
However, a Delaware judge invalidated this deal in January 2024, ruling that it hadn’t been negotiated fairly. A subsequent attempt to approve this package was also turned down last December.
As of now, Tesla’s stock has seen an 8% decrease since the beginning of the year, a significant change considering that earlier this year, shares had plummeted over 40% amid Musk’s challenging management during the Trump administration.
