Board’s Vision for an Unprecedented Pay Package

In a shareholder letter, Tesla’s board presented what they describe as the largest CEO compensation plan in corporate history. The proposal is structured to align Elon Musk’s personal wealth with Tesla’s future market dominance, aiming to keep his attention on the automaker amid his other ventures.

Performance Milestones and Vesting Requirements

The plan sets a series of ambitious targets. To earn the full payout, Musk must increase Tesla’s market capitalization from its current level to $8.5 trillion. Additional benchmarks include the deployment of one million Tesla robotaxis and the production of one million AI robots. The compensation is also contingent on Musk stays with Tesla for at least seven and a half years to receive any shares, with full vesting after ten years.

Potential Financial Impact

If Musk meets all the stipulated goals, his ownership stake could rise dramatically, potentially swelling from the current 13 percent to 29 percent. The total value of the payout, based on the plan’s calculations, would approximate $900 billion, a figure that would elevate Musk to the world’s first trillion‑dollar CEO.

Board Rationale and Shareholder Vote

Board members Robyn Denholm and Kathleen Wilson‑Thompson emphasized Musk’s singular vision as crucial to navigating what they label an “inflection point” for the company. They also indicated that the proposal responds to Musk’s expressed willingness to pursue other interests if his compensation were not secured. The plan now heads to a shareholder vote, with approval required for it to take effect.

Context and Controversy

This proposal follows a Delaware judge’s earlier decision to strike down a similar performance‑based package from 2018, which Tesla subsequently appealed. The new plan, if approved, would replace the older arrangement. The board has also highlighted structural safeguards designed to minimize stock‑price volatility, acknowledging the volatility Tesla’s shares have experienced in recent years.

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