Tesla recently revealed a groundbreaking new compensation package for CEO Elon Musk in its 2025 proxy statement, which could be worth up to $1 trillion if all milestones are met. The 2025 CEO Performance Award spans a decade and links Musk’s potential payout to Tesla’s market value and ambitious operational goals.
For Musk to receive the full award, Tesla’s market capitalization must reach $8.5 trillion, resulting in nearly $7.5 trillion in additional shareholder value. The package consists of 12 tranches, each equivalent to around 1% of the company. To unlock a tranche, Musk must achieve both a market cap milestone and a corresponding operational milestone. For example, the first tranche would vest at a $2 trillion market cap and 20 million vehicles delivered.
Aside from market cap milestones, other requirements include reaching 10 million active FSD subscriptions, delivering 1 million AI-powered robots, and having 1 million Robotaxis in commercial operation. The package aims to challenge Musk to meet even more ambitious goals than before, including operational milestones focused on achieving Adjusted EBITDA targets and introducing new or expanded product offerings.
The Board of Directors at Tesla, including Robyn Denholm and Kathleen Wilson-Thompson, emphasized the importance of incentivizing Musk to achieve these goals. They highlighted the need to create nearly $7.5 trillion in value for shareholders for Musk to receive the full award, solidifying his role in driving Tesla towards becoming the most valuable company in history.
The new compensation proposal builds upon Musk’s 2018 CEO Performance Award, which was valued at over $50 billion and was ultimately struck down by a Delaware court. Despite ongoing legal battles, Musk was recently granted an interim $29 billion stock package, with plans for a long-term compensation strategy to be presented at the annual shareholder meeting in November.
If Musk earns all 12 tranches of the new award, his stake in Tesla would increase to at least 25%, with a mandatory 7.5-year holding period on any new shares awarded. Shareholders will have the opportunity to vote on the new compensation plan at Tesla’s annual meeting on November 6. The Board believes that this new award is a more demanding evolution of the original, designed to propel Tesla towards unprecedented success.