Tesla’s board of directors is urging shareholders to approve a massive new compensation package for CEO Elon Musk, one that could ultimately be worth up to $1 trillion over the next decade. The proposal, unveiled in a Friday filing, would grant Musk hundreds of millions of shares if Tesla achieves ambitious financial and production milestones.
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Record-Breaking Proposal
According to the filing, Tesla’s board is offering Musk around 423 million shares, valued today at $143 billion, contingent on the company reaching profitability, production, and market capitalization targets. The proposal marks what could be one of the most lucrative pay deals in corporate history.
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Board’s Rationale Explained
In a letter to shareholders, Tesla’s directors wrote: “Tesla does not currently have a long-term CEO performance award in place to retain and incentivize Elon to focus his energies on Tesla and lead us through this pivotal moment in our history. It’s time to change that.” The board emphasized Musk’s leadership as vital to the company’s future.
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Trillion-Dollar Conditions
For Musk to claim the full award, Tesla must reach a staggering $8.5 trillion market capitalization within 10 years, roughly eight times its current value. At that point, the stock awarded to Musk would exceed $1 trillion. Other operational milestones include delivering 20 million vehicles, producing 1 million robotaxis, and manufacturing 1 million humanoid robots, known as Optimus.
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Increased Voting Power
The package would also expand Musk’s influence within Tesla by boosting his voting power. Analysts say this move is designed to keep him firmly at the helm at least until 2030. Dan Ives of Wedbush noted the deal is crucial as Tesla enters a “pivotal growth cycle” focused on autonomy and robotics.
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Legal Challenges Resurface
Musk’s compensation has faced challenges before. In 2018, shareholders sued over his $56 billion package, accusing him and Tesla’s board of breaching fiduciary duties. A Delaware judge revoked that deal in December. Despite this, Tesla announced in August it was granting Musk shares worth $29 billion, showing the board’s determination to retain him.
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Sales and Profit Decline
While Tesla pursues bold targets, its recent financials have shown strain. Vehicle sales fell 1% in 2024, marking the company’s first annual decline in 12 years. Quarterly profits also plunged from nearly $1.4 billion to $409 million, with revenues down amid stronger competition and political backlash tied to Musk’s public support for Donald Trump.
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Stock Market Performance
Despite setbacks, Tesla’s stock has remained resilient. Shares have slumped in 2025 but gained 54% over the last year and surged 143% across the past five years. The proposed package, if approved, ties Musk’s future wealth directly to Tesla’s ability to sustain and accelerate such growth.