Tesla’s New Deal for Elon Musk Could Reach $1 Trillion

Tesla is proposing an unprecedented compensation package for CEO Elon Musk, potentially totaling up to $1 trillion. This ambitious plan aims to secure Musk’s leadership at the electric vehicle company for many years ahead, with specific performance benchmarks that need to be met for him to receive the full amount.

Previously, a Delaware judge had invalidated Musk’s earlier pay package, which was worth $56 billion. In January, following an initial ruling, Tesla conducted a shareholder vote during its annual meeting in Austin, Texas, in June, seeking approval for its 2018 compensation plan for Musk. Despite efforts from Musk’s legal team to challenge the judge’s ruling, the judge rejected their arguments, stating that it would set a problematic precedent to allow defeated parties to create new facts to alter judicial outcomes.

The proposed deal, outlined in Tesla’s proxy filing, spans a decade and depends on various conditions. Among these, Musk is pushing for significant growth in Tesla’s newest Robotaxi venture, aiming for a valuation increase from approximately $1.1 trillion to at least $8.5 trillion. Meeting all the outlined performance goals could increase Musk’s stake in Tesla to at least 25%, aligning with his expressed interest in acquiring such a share.

This incentive structure is designed to keep Musk focused on Tesla’s expansion, particularly in emerging sectors like robotics and AI. The proxy also suggests a non-binding proposal for Tesla to invest in Musk’s startup, Xai, something he’s previously mentioned. Shareholders will vote on these proposals, including the compensation package, during their annual general meeting set for November 6th.

The Tesla board continues to support Musk despite his commitments to other ventures. Besides Tesla, Musk is also at the helm of SpaceX, Xai, Neuralink, and The Boring Company. Nonetheless, he assures investors of his intention to maintain his role at Tesla for at least the next five years.

Under the new agreement, Musk must remain in his role as CEO or an executive responsible for the product or operations in order to earn shares, which are divided into 12 segments. To unlock these shares, he must achieve 12 market capitalization milestones that are linked to operational goals, such as producing 1 million Optimus robots and distributing 2 million Tesla vehicles, as well as having 1 million robot taxis in commercial service.