Tesla has unveiled a groundbreaking compensation proposal for its chief executive officer, Elon Musk, which could reach approximately $1.53 trillion (USD). This unprecedented package aims to secure Musk’s leadership at Tesla for the next decade, contingent on achieving ambitious performance goals, including expanding the company’s robotaxi business and increasing its market value from around $1 trillion to at least $8.5 trillion.
The terms of the proposed agreement, detailed in Tesla’s proxy filing, establish a framework where Musk could significantly enhance his ownership stake in the electric vehicle manufacturer, potentially raising it to over 25 percent. This plan comes after a previous compensation package, valued at more than $50 billion, was invalidated by a Delaware court.
In response to the ongoing legal situation, Tesla’s board is exploring alternative forms of compensation for Musk, including a stock award valued at around $30 billion set for early August. The objective is to maintain Musk’s focus on Tesla as it seeks growth in emerging sectors such as robotics and artificial intelligence.
New Milestones and Shareholder Proposals
In addition to the compensation package, the recent filing includes a non-binding proposal for Tesla to consider investing in Musk’s xAI startup, a concept Musk has previously indicated interest in. This new agreement emphasizes Musk’s central role at Tesla, despite his responsibilities with four other companies: SpaceX, Neuralink, and The Boring Company.
Musk has led Tesla since 2008 and has expressed his intent to remain at the company’s helm for the next five years. In a May interview with Bloomberg, he reaffirmed his commitment to Tesla, highlighting the importance of retaining his leadership. Tesla’s shareholders witnessed a modest stock increase of 2 percent early Friday, although the shares have experienced a 16 percent decline this year.
Achieving a market capitalization of $8.5 trillion would position Tesla more than double the current value of Nvidia, marking a significant milestone in the tech and automotive sectors. The latest CEO package, valued at $87.8 billion in the filing, could escalate to around $1 trillion if Musk meets all performance targets and acquires all restricted shares. Additionally, Musk must engage in developing a succession plan for the CEO role to qualify for the final segments of the performance award.
Musk’s Leadership Amidst Competing Interests
The proposed pay package underscores Musk’s strong influence over Tesla, despite the various demands on his time. His focus has increasingly extended to political engagements, notably his support for former President Donald Trump during last year’s election, which has led to backlash against Tesla, including incidents of vandalism at facilities.
Despite these challenges, Tesla has regained momentum in recent months, launching its long-anticipated driverless taxi service on June 22 in Austin, Texas. This service is seen as a critical component of the company’s future strategy.
As Tesla navigates these developments, the board’s decision to support Musk, despite his diverse interests, reflects the company’s commitment to harnessing his vision for growth while addressing shareholder concerns. The path ahead is marked by ambition, with both the board and Musk focused on reinforcing Tesla’s position in the evolving landscape of technology and transportation.
