Tesla unveiled a bold new compensation plan for CEO Elon Musk on Friday, one that could be worth more than $1 trillion if the company achieves stratospheric growth through breakthroughs in autonomous driving and artificial intelligence.
According to a filing with the UFS Securities and Exchange Commission (SEC), the proposed package would grant Musk up to 12% in additional Tesla shares, contingent on meeting a series of aggressive performance milestones. Chief among them: boosting Tesla’s market capitalization to at least $8.5 trillion by 2035.
Tesla’s current market cap stands just above $1 trillion, down from previous highs following a period of disappointing earnings. Some analysts have cited Musk’s increasingly partisan political activity—including vocal support for far-right figures—as a factor behind weakening demand.
Still, Musk remains bullish on Tesla’s future. In July, he predicted that if Tesla succeeds in scaling self-driving technology and AI, it will become “the most valuable company in the world by far.”
Investors appeared to support the vision, with Tesla shares rising 2.5% after the announcement. The new package links Musk’s potential payout directly to long-term shareholder value, an approach that typically resonates with investors.
The proposed plan comes just months after a Delaware court struck down Musk’s previous $55.8 billion pay package from 2018, citing flaws in the board’s approval process. Tesla is now appealing that decision while moving forward with this new framework, which is set for a shareholder vote on November 6 at the company’s annual meeting in Austin, Texas.
Earlier this month, Tesla also floated an “interim” award worth $29 billion to retain Musk amid what the board called intense competition for top executive talent.
In a letter to shareholders, Tesla Chair Robyn Denholm and board member Kathleen Wilson-Thompson described the proposed package as a “super ambitious incentive plan for a pioneering, ambitious, and unique CEO.” They emphasized Musk’s central role at what they called a “critical inflection point” for the company.
According to the filing, the plan includes goals such as having 1 million robotaxis and 1 million AI bots in commercial operation, as well as delivering 20 million vehicles.
To receive the full award, Musk must hit 12 separate market capitalization milestones. The first tranche would unlock at a $2 trillion valuation, with additional tranches awarded in $500 billion increments.
In addition to market cap, the package is tied to operating profit and product development goals, and requires Musk to stay with Tesla for at least 7.5 years, or a full 10 years to earn the complete payout. If all targets are met, Musk’s ownership stake in Tesla would rise to more than 25%.
CFRA analyst Garrett Nelson expects the proposal to be approved.
“For Musk to even hit the first tranche, Tesla’s stock basically has to double,” Nelson said. “Investors like the fact that the package closely aligns executive compensation with shareholder returns.”
While the plan appeals to many investors, Tesla acknowledged in its SEC filing that the sheer size of the award could spark a public backlash.
“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,” the company warned.
Musk’s popularity has been sliding. In a Gallup poll conducted in August, he was the least popular among 14 prominent public figures, with just 33% favorable and 61% unfavorable ratings—ranking below even Israeli Prime Minister Benjamin Netanyahu and former US President Donald Trump.
Musk’s role as a business leader has been increasingly complicated by political entanglements. After briefly joining President Trump’s administration in early 2025, he exited Washington amid growing tensions. The two traded barbs in the spring but have since toned down their public exchanges.
Meanwhile, Tesla has faced mounting business challenges. Sales and profits have declined over the past year, due in part to delays in launching new vehicle models. The highly anticipated Cybertruck, for instance, has underperformed in early sales and received mixed reviews.
Despite these hurdles, Tesla’s board remains committed to Musk’s leadership, betting that his ambitious vision and aggressive timelines can drive the next phase of exponential growth.
AFP
