Tesla Board Champions Musk's Trillion-Dollar Pay Package Amidst Shareholder Vote

Tesla's Board of Directors is strongly advocating for a new, ambitious pay package for CEO Elon Musk, potentially worth $1 trillion in stock. This proposal aims to reward Musk for achieving significant performance targets, a move designed to retain his leadership following a previous Delaware court ruling that voided a similar compensation plan.

Key Takeaways

• Tesla's Board is pushing for a new $1 trillion pay package for CEO Elon Musk.

• The package is tied to ambitious performance goals, including massive market capitalization growth and operational milestones.

• The Board emphasizes Musk's crucial role in Tesla's success and the need to retain him.

• Shareholders will vote on the proposed 2025 CEO Performance Award at the upcoming meeting.

A New Era of Compensation

Following the Delaware Chancery Court's decision to invalidate Musk's previous 2018 pay package, deeming it an "unfathomable sum," Tesla's Board is moving forward with a revised plan. The new proposal, the "2025 CEO Performance Award," is structured to incentivize Musk by linking his compensation to the company's substantial growth and operational achievements. The Board asserts that Musk has not been meaningfully compensated since 2017 and that his continued leadership is vital for Tesla's future success.

Ambitious Performance Targets

The 2025 CEO Performance Award sets even more challenging goals than the previous plan. Musk must achieve specific Adjusted EBITDA targets, which are reportedly up to 28 times higher than those in the 2018 award. Additionally, the package includes milestones such as having one million Robotaxis in commercial operation and delivering one million AI Bots. Crucially, Musk needs to increase Tesla's market capitalization by approximately $7.5 trillion to receive the full award, which is divided into 12 tranches totaling 423,743,904 shares.

Board's Endorsement and Shareholder Vote

Board members Robyn Denholm and Kathleen Wilson-Thompson have issued a statement urging shareholders to approve the new award. They highlighted that the 2018 package framework, which ensured Musk was paid only for delivered performance, was highly successful. The 2025 award builds on this, challenging Musk to meet "even more aspirational goals." The package also includes "supercharged retention" features, with shares vesting over seven and a half to ten years, and structural protections to mitigate stock price volatility. The Board believes that achieving these milestones will position Tesla as the most valuable company in history, underscoring their firm stance on Musk's indispensable role.