Tesla has proposed an unprecedented trillion-dollar payout package for CEO Elon Musk — outlining a series of ambitious benchmarks to secure the full amount. The development comes weeks after the company board approved an interim compensation package worth about $29 billion in restricted stock. Both moves were designed to incentivise the billionaire businessman to continue leading Tesla as it pivots to an AI-first strategy.
Musk does not receive a cash salary or bonuses from Tesla — instead earning from stock option packages that allow him to purchase shares at a much lower price than the market. He is currently the largest shareholder of the company with about 13% ownership. This figure could be increased significantly over the next decade if the proposed compensation plans are fully realised.
What is the proposal?
According to reports, the long-awaited proposal will include several caveats including expansion of the Tesla robotaxi business and growing of overall market value from the current $1 trillion to at least $8.5 trillion. It will be the largest payout in corporate history (if approved) and span 10 years. The Tesla board also sought investor approval for Musk’s 2025 compensation package on Friday. Shareholders have also requested the board to authorize an investment into his xAI startup.
Musk had previously urged the Tesla board to arrange a new compensation package for him — suggesting he would pursue artificial intelligence and robotics products elsewhere if he didn’t have roughly 25% voting control. A proxy filing accessed by Bloomberg suggests that additional shares he receives under this proposal would achieve this goal.
Legal hurdles?
The plan offers a massive financial windfall and expanded control of the company before the world’s richest person — after his 2018 package valued in excess of $50 billion was struck down by a Delaware court. Tesla has since appealed the decision and sought alternative ways to compensate its CEO. This included the interim stock award approved in early August that was valued at nearly $30 billion. But this ‘interim’ award has already drawn scrutiny from several quarters — with shareholder groups raising “serious concerns” with regulators. It is also pertinent to note that this award is contingent on appeals for the 2018 package. Simply put, the new award will be cancelled if Musk wins his appeal against the Delaware court decision. The proposed trillion-dollar package is also likely to face similar scrutiny.