Tesla has proposed a new $1 trillion pay package for chief executive Elon Musk, in what would be the largest compensation deal ever awarded to a corporate leader.
Under the plan, Musk would receive 12 tranches of shares over the next decade if Tesla hits a series of financial, production and technological milestones. If achieved in full, the deal would lift 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 sphere “wind down in a timely manner”, reflecting investor concern over his public clashes and a messy split with US President Donald Trump.
To unlock the first tranche, Musk would need to nearly double Tesla’s market capitalisation to $2 trillion while achieving a cumulative 20 million vehicle deliveries from the date of Tesla’s first production car.
Further milestones include rolling out one million Robotaxis, delivering one million AI-powered humanoid bots, and hitting aggressive earnings and product targets. Meeting them all would increase Musk’s stake in Tesla to at least 25% and grant him greater voting power over the company’s future.
Tesla chairwoman Robyn Denholm and board member Kathleen Wilson-Thompson told shareholders the award was critical to keeping Musk focused on Tesla at a pivotal point in its history.
“Simply put, retaining and incentivising Elon is fundamental to Tesla achieving these goals and becoming the most valuable company in history,” they wrote.
Denholm told CNBC the deal was structured to reward delivery, not promises: “If he performs, if he hits the super ambitious milestones that are in the plan, then he gets equity. It’s 1 per cent for each half a trillion dollars of market cap, plus operational milestones.”
The $1 trillion package dwarfs Musk’s previous pay arrangements. Earlier this year, Tesla approved an interim stock award valued at $29 billion to secure his leadership through 2030.
The Delaware Court of Chancery struck down Musk’s 2018 pay plan, then worth up to $56 billion, ruling it excessive and improperly granted. Musk is appealing, claiming the court erred in rescinding a deal that shareholders had approved twice. That package spurred Tesla’s extraordinary growth over the past five years but became a flashpoint for corporate governance concerns.
Now Tesla’s board is betting that an even larger, more ambitious award will ensure Musk devotes his energy to transforming the company from an electric vehicle maker into an AI-first technology giant. Shareholders will vote on the new plan in the coming months.
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Tesla proposes $1 trillion pay package for Elon Musk, the largest in corporate history