Tesla’s board has proposed a $1 trillion compensation package for Chief Executive Elon Musk that would award him 12% of the company’s total stock if he achieves demanding performance targets, including raising the electric vehicle maker’s market capitalisation to $8.5 trillion.
The proposal requires shareholder approval and comes after a Delaware court struck down Musk’s previous $50 billion pay package in 2018. Tesla currently holds a market value of approximately $1.09 trillion.
Package requires Tesla market cap to reach $8.5 trillion
To achieve maximum compensation, Musk must increase Tesla’s valuation to $8.5 trillion, equivalent to the combined market capitalisations of Meta, Microsoft and Alphabet. The target represents more than double Nvidia’s current $4.2 trillion valuation, presently the world’s most valuable company.
Board members Robyn Denholm and Kathleen Wilson-Thompson stated: “We believe that Elon’s singular vision is vital to navigating this critical inflection point. Simply put, retaining and incentivising Elon is fundamental to Tesla achieving these goals and becoming the most valuable company in history.”
Performance milestones include delivering 20 million vehicles, securing 10 million active Full Self-Driving subscriptions, selling one million AI robots, deploying one million Robotaxis into commercial operation, and generating $400 billion in adjusted EBITDA profits.
Board seeks shareholder approval for unprecedented compensation
The board argues the package is necessary to retain Musk long-term and motivate him to achieve Tesla’s operational objectives. They contend Tesla can help create a society that “democratises autonomous goods and services” through innovative and affordable technologies.
Bloomberg described the proposal as “a massive package without precedent in corporate America,” noting it would provide Musk with expanded voting control alongside financial compensation.
The Financial Times characterised achieving the maximum payout as “extremely challenging,” whilst the Wall Street Journal highlighted that the proposal would increase Musk’s voting power at the company.
Tesla has provided an interim stock award valued at approximately $30 billion whilst appealing the Delaware court decision regarding Musk’s previous compensation package.
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