Tesla Inc. (TSLA) has unveiled a new compensation proposal for CEO Elon Musk, potentially valued at an unprecedented $1 trillion — a figure unmatched in U.S. corporate history.
The package, spanning a decade, is structured around a series of steep performance goals intended to secure Musk’s leadership well into the future. To unlock the full payout, Musk would need to drive Tesla’s valuation from its current ~$1 trillion to at least $8.5 trillion, while also scaling up emerging businesses such as robotaxis.
Tesla CEO Elon Musk
If fully realized, the plan would raise Musk’s ownership stake in Tesla to no less than 25% — aligning with his stated desire for greater voting control. Tesla disclosed the proposal in a proxy filing on Friday.
The board’s move comes as Tesla appeals a Delaware court decision that invalidated Musk’s landmark 2018 pay package, once valued at over $50 billion. In the meantime, directors have floated other incentives, including a temporary $30 billion stock award issued in August.
According to Tesla, the new structure is intended to keep Musk focused on core company priorities while advancing bets on robotics and AI. The proxy also featured a shareholder proposal, non-binding, for Tesla to take an equity stake in Musk’s AI startup, xAI.
Despite juggling leadership roles at SpaceX, xAI, Neuralink, and The Boring Company, Musk maintains tight control of Tesla. He has led the company since 2008 and told Bloomberg earlier this year that he expects to remain in charge at least five more years.
“Retaining and motivating Elon is central to Tesla’s ambition to become the most valuable company in history,” wrote Chair Robyn Denholm and director Kathleen Wilson-Thompson in a letter to investors.
Tensions Over Control
At 54, Musk has pressed Tesla’s board for a fresh pay plan, signaling that he might prioritize robotics and AI elsewhere if he does not achieve the 25% stake he seeks. While still Tesla’s largest individual shareholder, Musk sold a sizable portion of his holdings to finance his $44 billion acquisition of Twitter, later rebranded as X and merged with xAI.
Musk’s political activity and involvement in other ventures have sparked investor unease. His financial backing of Donald Trump in the last election and brief advisory role in Washington fueled public backlash, including vandalism of Tesla facilities. Tesla also posted weak deliveries earlier this year, leading to a double-digit sales decline.
Still, Tesla has regained momentum, recently launching its long-anticipated driverless taxi service in Austin — a cornerstone of Musk’s vision for the company.
The board acknowledged concerns in its filing, noting that Musk’s profile attracts outsized scrutiny but emphasizing that “our direct experience with Musk does not support the view that his other activities undermine his leadership.”
The New Targets
To earn each tranche of the award, Musk must remain CEO or a top executive in charge of product or operations while hitting 12 paired milestones: market capitalization goals and operational objectives. These include delivering 20 million vehicles, deploying 1 million robotaxis, shipping 1 million Optimus humanoid robots, and boosting adjusted EBITDA to $400 billion.
Echoes of the 2018 Deal
Tesla’s 2018 award gave Musk options worth about $2.6 billion at grant, tied to aggressive growth targets. Those options later swelled in value to more than $50 billion and at times topped $100 billion, tracking Tesla’s soaring stock price.
But after a shareholder lawsuit alleged conflicts of interest and insufficient disclosure, Delaware’s Chancery Court struck down the plan earlier this year. Tesla has appealed to the Delaware Supreme Court, with arguments set for Oct. 15. In a symbolic move, investors last year voted to re-ratify the old package.
In parallel, Tesla has shifted its legal base from Delaware to Texas and altered its bylaws, requiring plaintiffs to hold at least 3% of shares before suing — a change likely to deter further challenges to Musk’s compensation.