Tesla has revealed a groundbreaking pay plan for CEO Elon Musk that could total an astonishing $1 trillion.
This 10-year strategy, made public in a proxy filing on Friday, links Musk’s compensation to a series of twelve specific goals. These targets include increasing Tesla’s market value over eightfold, ultimately hitting more than $8.5 trillion, alongside ambitious plans related to Robotaxis, robotics, and artificial intelligence.
Currently, Tesla’s market cap stands around $1.09 trillion.
As Musk meets these benchmarks, his stake in the company could rise to at least 25%, translating into approximately 29% voting control, as noted in the proxy application.
“In essence, ensuring Elon remains motivated is crucial for Tesla to fulfill these ambitions and to become the most valuable company ever,” wrote Chairman Robin Denholm and Director Kathleen Wilson Thompson in their letter to shareholders.
This plan comes on the heels of a Delaware court’s ruling in January, which declared a previous $56 billion compensation package from 2018 as problematic due to conflicts of interest.
Judge Cataline McCormick determined that Musk wielded too much influence over Tesla’s board and that shareholders were inadequately informed during the approval process.
Tesla is appealing this decision to the Delaware Supreme Court, with oral arguments scheduled for October 15. In the meantime, Musk secured an interim equity award in August worth around $30 billion.
The new compensation package starts with $87.8 billion in basic grants but could eventually escalate to $1 trillion, contingent upon Musk fulfilling all outlined goals—such as selling 20 million vehicles, deploying 1 million Robotaxis, producing 1 million humanoid robots, and achieving a targeted increase in EBITDA.
Musk, age 54, has hinted that he might explore AI and robotics projects outside of Tesla unless he pushes for new deals and manages to secure about 25% voting control. Earlier this year, his AI venture, Xai, absorbed the social media platform X, previously known as Twitter.
The board has also hinted at a shareholder proposal regarding Tesla potentially acquiring shares in Xai.
Despite endorsing Musk’s leadership, the filing acknowledges that his prominent public image brings serious scrutiny, raising concerns about whether his various interests and political involvement could detract from Tesla’s focus.
These distractions have already come to light.
Musk was a significant financial supporter of former President Donald Trump’s 2024 campaign and was briefly involved in efforts to reform the federal government, which led to backlash, including vandalism at Tesla locations.
Tesla’s vehicle delivery dropped by 13% during the first half of this year, resulting in some of the company’s weakest performance metrics in recent times.
In May, Musk stepped down from his government role and pledged to dedicate more time to Tesla. Shortly after, the company launched its long-anticipated Robotaxi service in Austin, which Musk has promoted as pivotal for future growth.
Tesla shares climbed by 1.9% on Friday morning, though they have dropped 16% overall this year. The stock reached its peak valuation of $1.5 trillion in the latter part of 2024.
Votes from shareholders regarding the new compensation plan are slated for Tesla’s annual general meeting in November. Should it be approved, it would mark the largest executive compensation package in the company’s history, surpassing all previous records.
This post is pending comments from Tesla and Musk.
