WASHINGTON (dpa-AFX) - The Board of Directors of Tesla, Inc. (TSLA) have proposed an unprecedented compensation package of more than $1 trillion for its Chief Executive Officer Elon Musk that will make him the first trillionaire.
According to Tesla's proxy filing, the proposal calls for the grant of additional shares in Tesla that will push Musk's voting stake in the electric car maker to at least 25 percent, which he has openly demanded for some time.
The total award size will be 423.74 million shares of Tesla's common stock, which represents a 12 percent stake in the company. The additional shares will push Musk's stake in the company to 24.8 percent from the 13.5 percent stake he currently owns.
Musk's stake can also rise to 28.8 percent including the 2018 CEO Performance Award, a part of which is in a legal dispute despite shareholder approval.
The new award would be worth $143.5 billion at Thursday's closing stock value. Musk currently owns 410 million shares of Tesla common stock, worth $139 billion at Thursday's closing price.
The proposed 2025 CEO Performance Award uniquely challenges Musk to guide Tesla through a new phase of unprecedented growth by rewarding him only if he delivers once again on several milestones, including extraordinary financial returns for Tesla shareholders.
The new award aims to build upon the success of the 2018 CEO Performance Award framework, which ensured that Musk was only paid for performance delivered and incentivized to guide Tesla through a period of meteoric growth.
The 2025 CEO Performance Award similarly challenges Musk to again meet a series of even more aspirational goals, including operational milestones focused on reaching Adjusted EBITDA targets that are up to 28 times higher than the 2018 CEO Performance Award's milestone.
The Board's Special Committee designed the 2025 CEO Performance Award with the primary objective of incentivizing and retaining Musk at the helm to lead Tesla through its next phase of transformational growth.
The massive proposal is part of the plan to incentivize Musk to focus on Tesla's growth, despite competing priorities, as he oversees four other companies: SpaceX, xAI, Neuralink and the Boring Co. He is also involved in politics and has announced plans to form a third political party after recently falling out with US President Donald Trump.
Musk had earlier urged the Tesla board for a new compensation package that will give him a near 25 percent stake in the company. Otherwise, he suggested he would pursue artificial intelligence and robotics products elsewhere.
Under the pay package proposal, Musk is required to remain at Tesla as its CEO or an executive officer with responsibility for product or operations to make him eligible to receive the share awards. The share awards are divided into 12 tranches and each will be awarded on the achievement of 12 market capitalization milestones along with 12 operational milestones.
These include milestones such as delivery of 1 million AI powered robots, delivery of 20 million Tesla vehicles, having 1 million Robotaxis in commercial operation, having 10 million active FSD subscriptions, and growing adjusted EBITDA to $400 billion.
To be eligible for the full payout, Musk is required to focus on growing the company's market value to at least $8.5 trillion by 2035 from around $1 trillion in 2025.
The proxy filing states that if Musk achieves all the performance milestones under the 2025 CEO Performance Award, he would have propelled Tesla to become the most valuable company in history.
The Tesla Board has adopted and granted the 2025 CEO Performance Award on Wednesday, but it is subject to approval by shareholders or the termination or expiration of the waiting period under the HSR Act.
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