Tesla's board of directors has proposed a new compensation plan for CEO Elon Musk that could be valued at up to $1 trillion, potentially making it the largest executive pay package in history. The proposal would allow Musk to earn up to 12% of Tesla’s stock if the company achieves specific ambitious targets over the next decade. Currently, Tesla's market capitalization stands at approximately $1.1 trillion, and the targets include reaching a market value of $8.5 trillion and delivering 20 million vehicles by 2035.
Tesla Chair Robyn Denholm emphasized the necessity of Musk's leadership during a critical phase for the company, citing his pivotal role in its growth. The board noted that Musk has not received significant compensation since 2017, despite overseeing a substantial increase in the company's market value since then.
The proposed compensation plan is contingent upon achieving not only the market valuation but also operational milestones, such as launching 1 million robotaxis and reaching $400 billion in adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA). For context, Tesla reported $16.6 billion in adjusted EBITDA for the year 2024.
Following the announcement, Tesla's stock experienced an uptick. This proposal comes shortly after a previous compensation deal worth $29 billion was also aimed at keeping Musk at the helm as the company transitions from electric vehicle production to other ventures, including robotaxis and humanoid robots.
As the situation develops, Musk has indicated his intention to remain as CEO for the foreseeable future, despite ongoing legal challenges related to previous compensation agreements.