NEW YORK: Tesla has unveiled a proposed compensation package for CEO Elon Musk that could exceed $1 trillion if he delivers on ambitious growth targets involving new technologies.
The plan would grant Musk up to 12% of additional company shares should Tesla achieve specific performance milestones outlined in a filing with the US Securities and Exchange Commission.
To receive the full award, Tesla must reach a market capitalization of at least $8.5 trillion by 2035, a significant increase from its current valuation of just over $1 trillion.
The announcement comes amid recent sales challenges that analysts attribute partly to Musk’s embrace of far-right politicians, which has sparked criticism among some consumers.
Musk has consistently described Tesla’s growth potential as nearly boundless, particularly if the company delivers on its vision for autonomous driving and artificial intelligence applications.
Tesla shares rallied following the announcement as investors responded positively to the direct linkage between Musk’s potential compensation and long-term shareholder performance.
This proposal follows an interim compensation award worth approximately $29 billion announced earlier this month, which Tesla justified as necessary to retain its controversial CEO during intense competition for top talent.
The company is currently challenging a Delaware court ruling that struck down a 2018 package valued at about $55.8 billion for Musk.
Tesla Chair Robyn Denholm and board member Kathleen Wilson-Thompson described the new package as a super ambitious incentive package for a pioneering, ambitious and unique CEO in a letter to shareholders.
They emphasized that Musk’s singular vision is vital to navigating this critical inflection point while setting additional conditions including one million robotaxis in commercial operation and one million AI bots.
The filing acknowledged that the unprecedented scale of the proposed compensation might worsen public backlash against both Tesla and Musk, whose personal fortune is estimated at around $435 billion.
Adverse public perception of the 2025 CEO Performance Award, even if it is baseless or satisfactorily addressed, may result in negative publicity for Tesla, which could materially and adversely affect our business, results of operations or financial condition, the filing stated.
A recent Gallup poll ranked Musk as the most unpopular among 14 public figures, with only 33% favorable rating against 61% unfavorable, placing him below Israeli leader Benjamin Netanyahu and US President Donald Trump.
The compensation package involves 12 milestones related to market capitalization, with the first tranche requiring Tesla to reach $2 trillion in market value and subsequent increases at $500 billion intervals.
Additional requirements include operating profit targets and product goals such as delivering 20 million Tesla vehicles, with the full package designed to ensure Musk remains at the company for at least seven-and-a-half years.
CFRA analyst Garrett Nelson expects shareholders to approve the package during the November 6 annual meeting in Austin, noting that investors like the fact that the pay package aligns with shareholder interests.
Musk’s leadership has transformed Tesla and SpaceX into major global companies, though his stewardship at Tesla has faced increased scrutiny following declining car sales and profits.
These challenges stem partly from Musk’s political activities and the sluggish rollout of new models after the polarizing Cybertruck achieved poor sales performance.
Tesla shares rose 2.5 percent following the announcement as markets digested the ambitious proposal that could potentially make Musk the highest-compensated executive in corporate history. – AFP