Tesla has unveiled a bold new compensation proposal for CEO Elon Musk that could become the most lucrative executive pay package in corporate history. The electric vehicle manufacturer’s board has asked shareholders to approve a plan potentially worth $1 trillion, a move that ties Musk’s financial rewards to groundbreaking company milestones and significantly increases his control over Tesla’s future.
The 2025 CEO Performance Award
In a filing with the U.S. Securities and Exchange Commission (SEC), Tesla detailed the “2025 CEO Performance Award,” a long-term incentive plan that spans a decade. The package is structured around 12 tranches of stock awards, each linked to specific operational and financial benchmarks.
To receive the full payout, Musk must drive Tesla’s market capitalization from its current level of around $1 trillion to at least $8.5 trillion, representing the creation of nearly $7.5 trillion in shareholder value. The board described the package as “supercharged,” with earnings targets that dwarf those of Musk’s landmark 2018 compensation deal.
Board chair Robyn Denholm and director Kathleen Wilson-Thompson explained in the filing: “In 2018, Elon had to grow Tesla by billions; in 2025, he has to grow Tesla by trillions. Shareholder value creation on this scale has never been attempted before.”
Ambitious Technology and Growth Milestones
The plan’s performance targets extend far beyond financial measures. Tesla has tied major portions of the award to revolutionary product and technology goals. These include:
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Deployment of 1 million robotaxis into commercial operation.
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Delivery of 1 million humanoid AI robots under the Optimus program.
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Expansion of Tesla’s market leadership in energy storage, software, and autonomous driving.
The company has emphasized that Musk’s continued leadership is essential as Tesla shifts from being primarily a carmaker to a diversified artificial intelligence and robotics enterprise. The board has embedded strict retention requirements: Musk must remain with Tesla for at least 7.5 years, and potentially up to a decade, to fully vest in the package.
Context of Legal Battles Over Musk’s Pay
The proposal comes as Tesla is still embroiled in legal disputes over Musk’s previous $56 billion pay deal awarded in 2018. Earlier this year, a Delaware court invalidated that package, citing flaws in the approval process. Tesla is currently appealing the ruling.
In the interim, Tesla’s board granted Musk a $29 billion stock award as a “good faith” measure, signaling its ongoing commitment to keeping him at the helm.
Despite legal uncertainties, Tesla has pointed to a string of recent milestones as evidence of Musk’s leadership success:
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Delivery of its 8 millionth vehicle.
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Deployment of 37 GWh of energy storage systems worldwide.
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Launch of robotaxi services in Austin, Texas, with expansion via a dedicated iOS app across the U.S. and Canada.
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Plans to remove safety operators from its robotaxi fleet by year-end.
These developments, according to Tesla, illustrate the company’s accelerating transformation into a leader in artificial intelligence, autonomous transportation, and robotics.
Market Reaction and Shareholder Decision
Following the announcement of the new package, Tesla’s stock rose about 2% in premarket trading, reflecting early investor optimism. The final decision rests with shareholders, who will vote on the proposal at Tesla’s annual meeting scheduled for November 6 at the company’s Gigafactory in Austin, Texas.
In its statement, the board framed the package as a necessity, writing: “Retaining Elon Musk is fundamental to Tesla achieving these goals and becoming the most valuable company in history.”
Musk himself has repeatedly suggested that Tesla’s long-term value will hinge less on electric vehicles and more on robotics. He has argued that humanoid robots, particularly the Optimus model, could account for as much as 80% of the company’s future worth.
Implications for Tesla’s Future
If approved, the compensation package would mark an unprecedented corporate gamble on both Musk’s leadership and Tesla’s ability to transform entire industries. The goals—ranging from multi-trillion-dollar market growth to mass deployment of robotaxis and humanoid robots—represent challenges never before undertaken at this scale.
For investors, the package raises both opportunities and risks. On one hand, Musk’s track record of defying skeptics and steering Tesla to dominance in the electric vehicle market provides a foundation for confidence. On the other hand, the sheer magnitude of the targets—and the legal controversies surrounding executive pay—leave uncertainty about whether shareholders will endorse the plan.
What Comes Next
All eyes now turn to Tesla’s November shareholder meeting. If the $1 trillion package is approved, it would solidify Musk’s role as the driving force behind Tesla for the next decade, with personal incentives directly tied to the company’s most ambitious goals.
If rejected, however, the outcome could reignite debates about Musk’s compensation, his influence over Tesla’s board, and the company’s future leadership.
For now, Tesla’s announcement underscores one central message: the company is betting its future not just on electric cars, but on Musk’s ability to lead it into the next era of artificial intelligence and robotics.
Sources: Reuters
