Tesla’s board of directors announced an unprecedented compensation proposal on Friday (September 5), planning to award CEO Elon Musk with stock incentives worth up to $1 trillion, contingent on the company meeting a series of operational and market value targets over the next 10 years. If approved by shareholders, this would be the largest compensation package in history.
According to regulatory filings, Musk will not receive any fixed salary or cash bonuses, with all rewards tied solely to performance. The plan will be released in stages, depending on whether Tesla can achieve various operational and financial milestones, including reaching a market value of $8.6 trillion (currently about $1 trillion), delivering 20 million electric vehicles, deploying 1 million robotaxis, producing 1 million humanoid robots, reaching 10 million Full Self-Driving (FSD) orders, and achieving an annual adjusted EBITDA of $400 billion (approximately $166 billion in 2024).
If all of the above targets are met, Musk would acquire shares equivalent to around 12% of Tesla’s total capital, increasing his stake from the current 13% to 29%, further solidifying his control over the company.
The board emphasized that this plan is designed to strengthen Musk’s commitment to Tesla and align his incentives with long-term shareholder value. Tesla’s chairman, Robyn Denholm, stated in a letter to shareholders, “Retaining and motivating Musk is crucial to whether Tesla can become the most valuable company in history.”
The documents indicated that the traditional executive compensation model does not apply to Musk, as the plan reflects his unique role in the tech industry.
The remuneration package is expected to be voted on at the shareholder meeting on November 6. The Tesla board stated that the plan had been reviewed by a special committee of independent directors and incorporated governance recommendations following a compensation dispute in 2018. It is worth noting that Musk’s $50 billion compensation plan from 2018 was revoked by a Delaware court, with the judge citing a lack of transparency in the board’s procedures.
Tesla stated that this plan also addresses concerns in the market about Musk being “distracted.” In recent years, Musk has devoted significant efforts to businesses such as xAI, SpaceX, Neuralink, X (formerly Twitter), and The Boring Company, raising concerns among some investors.
The documents also revealed that some shareholders proposed that Tesla invest in Musk’s new venture, xAI, but the board did not provide a specific recommendation for a vote on this. Musk had previously stated on the X platform, “If it were up to me, Tesla would have invested in xAI a long time ago.”
Following the announcement of the plan, Tesla’s stock price rose about 2% in pre-market trading. Earlier this year, the board temporarily approved a $29 billion restricted stock plan to ensure that Musk continues to lead Tesla at least until 2030, driving its “AI-first” transformation strategy.
Tesla has recently relocated its incorporation from Delaware to Texas and has appealed a previous compensation judgment.