The Kaipher Editorial Team 
The board of directors at electric vehicle manufacturer Tesla has proposed a compensation package for CEO Elon Musk that could potentially make him the world’s first trillionaire, contingent upon his achievement of a set of demanding performance criteria over the next decade. This proposal was made public on Friday as part of the company’s regulatory disclosures.
Elon Musk is already regarded as one of the wealthiest individuals in the world, and a substantial pay package granted to him in 2018 continues to be embroiled in legal disputes. If this new plan is ratified, it is expected to be the most significant corporate compensation deal in the history of the United States.
Tesla’s shareholders are scheduled to vote on this compensation proposal on November 6. The regulatory document indicated that the plan had previously been evaluated by a committee of independent directors. Brian Quinn, a law professor at Boston College, remarked to Reuters, “This is an extraordinarily large pay package. It raises numerous questions.” He expressed confidence that shareholders would likely approve the package, stating, “Given that Tesla’s stock price seems to be driven by sentiment rather than the company’s actual performance, I suspect they will endorse this compensation”.
The filing from Tesla’s management conveyed their belief that Musk warranted a higher compensation tier, even in light of the company’s recent fluctuations in the stock market. “Standard compensation structures provided to executives at other firms were deemed unsuitable for formulating Mr. Musk’s incentive compensation,” the document stated.
What Are the Conditions?
To qualify for the trillion-dollar compensation, Musk must meet ambitious targets aimed at reviving Tesla’s declining sales and enhancing its overall valuation and vehicle production within the next ten years.
- Initially, Musk would need to elevate Tesla’s valuation to $2 trillion, with a final target of $8.6 trillion by the conclusion of the plan. Currently, Tesla’s market value stands at approximately $1.03 trillion, roughly equivalent to the proposed compensation amount.
- By the end of the decade, Tesla would also need to have delivered a total of 20 million vehicles, a significant increase from the nearly 2 million units delivered last year.
- Additional targets include deploying one million self-driving robotaxis and one million AI robots, along with achieving $400 billion in adjusted EBITDA over four consecutive quarters, up from $16.6 billion in 2024.
- Musk is also required to establish a long-term succession plan for the CEO role.
All of Musk’s compensation outlined in the proposed package would be in the form of Tesla stock, awarded based on performance metrics, with no salary or cash bonuses. He would need to remain with the company for at least 7.5 years to redeem any of the shares earned, and if he stays until 2035, he would be eligible for the full package.
Legal Challenges and Context
This proposal comes after a Delaware court twice invalidated Musk’s previous $56 billion compensation package from 2018, ruling that Tesla’s board breached fiduciary duties in the approval process. Despite shareholders voting to ratify the 2018 package again in June, the Delaware court reaffirmed its ruling in December, stating the second vote could not retroactively cure the original flawed process. Tesla has appealed the decision while implementing an interim $29 billion stock award for Musk last month.
Unprecedented Scale and Structure
Musk currently owns about 13 percent of Tesla’s shares, with the possibility of acquiring an additional 12 percent through this plan—raising his influence and control over the company if all conditions are met.
The board has characterized the objectives as “Mars-shot milestones,” acknowledging they are significantly more demanding than Musk’s previous targets. Chairman Robyn Denholm stated that “retaining and incentivizing Elon is fundamental to Tesla achieving these goals and becoming the most valuable company in history”.
