Tesla proposes $1 trillion compensation plan for Elon Musk, the largest in corporate history
Tesla has proposed a new $1 trillion compensation plan for CEO Elon Musk, which will be the largest compensation deal ever.
Under the plan, Musk will acquire 12 shares in the next decade if Tesla reaches a series of financial, production and technology milestones. If fully realized, the deal would increase Tesla’s valuation from about $1 trillion today to $8.5 trillion, making it the most valuable company in the world and adding nearly $7.5 trillion in shareholder value.
The plan also stipulates that Musk’s activities in the political arena are “in a timely manner”, reflecting investors’ concerns about his public conflict and chaotic with U.S. President Donald Trump.
To unlock the first batch, Musk will need to almost double the market value of Tesla to $2 trillion, while achieving a cumulative 20 million cars from the date of Tesla’s first production car.
Further milestones include the launch of 1 million robots, providing 1 million AI-powered humanoid robots, and achieving positive revenue and product targets. Meeting them will increase Musk’s stake in Tesla by at least 25%, and give him greater voting rights to the company’s future.
Tesla Chairman Robyn Denholm and board member Kathleen Wilson-Thompson told shareholders the award is crucial to focusing Musk on Tesla’s historical key points.
“Simply put, retaining and inspiring Elon is the foundation for Tesla to achieve these goals and become the most valuable company in history,” they wrote.
Denholm told CNBC that the deal was structured as reward delivery, not a promise: “If he did well, if he reached the planned super ambitious milestone, then he would get fair. The market cap of every half million dollars is 1%, plus the operating milestone.”
The $1 trillion package is a small margin for Musk’s previous salary arrangement. Earlier this year, Tesla approved a temporary stock award worth $29 billion to secure his leadership by 2030.
The Delaware court beat Musk’s 2018 salary plan, which was worth as much as $56 billion, ruled that it was too much and mispriced. Musk is appealing, claiming that the court made a mistake in revoking a transaction that shareholders approved twice. The package has stimulated Tesla’s extraordinary growth over the past five years, but has become a flash point in corporate governance issues.
Now Tesla’s board of directors is betting that bigger, more ambitious awards will ensure Musk is committed to transforming the company from an electric car maker to an AI-first technology giant. Shareholders will vote on the new plan in the coming months.
