the time TeslaInvestors at Texas’ annual shareholders meeting in Austin yesterday (November 6) approved a record-setting compensation plan that could reward CEOs. Elon Musk Up to $1 trillion in Tesla stock over the next decade. The package, which is tied to an unusually high set of performance milestones, is the third long-term reward Tesla has designed to motivate Musk to grow Tesla’s business faster.
Tesla, which currently has a market capitalization of about $1.35 trillion, has seen slow EV sales recently. Its high stock price is instead riding on expectations that the company will deliver the next wave of AI-powered products, including robots and self-driving software. “What we’re about to start is not just a new chapter in Tesla’s future but a whole new book,” Musk told shareholders yesterday.
He urged investors to “hold onto your Tesla stock,” indicating his confidence that he can drive the company’s market value higher.
The pay plan, first proposed by Tesla’s board in September, was opposed by key proxy advisers, including Glass Lewis and Institutional Shareholder Services (ISS). Nevertheless, more than 75 percent of shareholders ultimately voted in favor of it.
The award is structured as 12 arms totaling 425 million shares, each tied to a mix of market value and performance targets. If Musk acquires them all, the shares will be worth nearly $1 trillion.
Here is the musk must fill:
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Bring Tesla’s market value to $2 trillion to unlock the first tranche.
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The next nine steps require a $500 billion increase in market value, up to $6.5 trillion.
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The final two steps require a $1 trillion raise, meaning Tesla should reach $8.5 trillion by 2035.
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Each goal must be maintained on a six-month and 30-day average basis.
In addition to those evaluation goals, Musk must hit a series of operational milestones:
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Deliver 20 million Tesla vehicles collectively.
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Reach 10 million active Full Self-Driving (FSD) subscriptions in three consecutive months.
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Deliver 1 million bots with Optimus or its successor.
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Deploy 1 million Robotaxis in commercial operations.
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Meet annual adjusted EBITDA milestones that begin at $50 billion and eventually reach $400 billion. (Tesla’s 2024 EBITDA was $12.44 billion.)
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The last two steps are conditional on Musk establishing a board-approved CEO succession plan. He will be 64 in 2035.
If Musk earns the full award, his stake in Tesla will rise from about 13 percent to 25 percent, matching a claim he has made publicly since early 2024. He argued that the greater ownership position was necessary not to enrich himself but to preserve his ability to lead Tesla “toAn artificial intelligence and robotics juggernaut Of truly immeasurable power and capability,” as he said in an earnings call in early 2024.
That vision is expected to include his AI startup xAINow worth about $200 billion. At yesterday’s meeting, Tesla shareholders also voted on a separate proposal to allow Tesla to invest in xAI. General advice from Tesla Brandon Erhart Said more shares were cast against the proposal, though there were many abstentions, and the board would review next steps.
Musk previously received two similarly structured awards in 2012 and 2018, but the new package is dramatically more ambitious. The 2012 plan required him to increase Tesla’s market cap by $4 billion increments; The 2018 plan raises that bar to $50 billion increments. This time, most plans made about a $500 billion jump.
“In 2018, Elon needs to raise Tesla by billions; in 2025, he needs to raise Tesla by trillions — to be precise, he needs to create about $7.5 trillion in shareholder value to get the full reward,” Tesla SEC filing yesterday.
