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Tesla’s board of directors proposed a new compensation plan for CEO Elon Musk worth a potential $1 trillion, marking what would be the largest pay package for an executive in history.
The board’s proposal would give Musk, already the richest person in the world, up to 12% of Tesla’s stock, worth about $1 trillion, if the automaker hits aggressive targets such as a market capitalization of $8.5 trillion as well as other operational milestones over a 10-year period. The company’s current market value is about $1.1 trillion.
Musk currently owns about 13% of Tesla’s outstanding shares. The proposed award comes in the form of restricted stock grants, which means he can’t immediately sell them.
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The new compensation plan could grant Tesla CEO Elon Musk up to 12% of the automaker’s stock. (Chip Somodevilla/Getty Images / Getty Images)
“We believe that Elon’s singular vision is vital to navigating this critical inflection point. We also recognize the formidable nature of this undertaking and as a result, the importance of having a leader who is not only willing and capable but eager to meet this challenge,” Tesla Chair Robyn Denholm said in a letter to investors.
Denholm said that “retaining and incentivizing Elon is fundamental to Tesla achieving these goals and becoming the most valuable company in history.”
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The board also argued that while Musk guided Tesla through a period of growth that saw its market capitalization increase by more than 20 times since March 2018, he didn’t receive “meaningful compensation” for his work since 2017, when he finished the goals of the 2012 pay plan.
However, Musk’s payout plan is tied not only to Tesla’s market value but also to ambitious business and financial targets such as delivering 20 million Tesla vehicles by 2035 and launching 1 million robotaxis into commercial service.
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Tesla will also need to reach $400 billion in adjusted EBITDA, which is a significant feat given that Tesla achieved $16.6 billion in 2024.
Tesla would need to deliver 20 million vehicles over the next 10 years for Musk to receive the pay package. (Yichuan Cao/NurPhoto via Getty Images / Getty Images)
Tesla shares rose Friday morning after the regulatory filing was published.
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This comes shortly after Tesla granted Musk a new $29 billion pay deal last month that was aimed at keeping the billionaire entrepreneur at the helm as the company pivots from its struggling electric vehicle business to robotaxis and humanoid robots.
Elon Musk is seen at a SpaceX facility in Brownsville, Texas. (Marvin Joseph/The Washington Post via Getty Images / Getty Images)
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The company described the “interim award” of 96 million new shares as a “good faith” payment to honor the more than $50 billion pay package from 2018 that was struck down by a Delaware court last year.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| TSLA | TESLA INC. | 338.53 | +4.44 | +1.33% |
Under the terms of that award, Musk can claim the shares if he remains a top executive at Tesla for another two years and a court doesn’t reinstate the 2018 package that is currently under appeal.
But even before that interim award, Musk declared in May that he plans to remain the leader of the electric vehicle giant in the years ahead.
Fox Business’ Eric Revell contributed to this report.
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