Elon Musk $1 Trillion Pay Package: Tesla has proposed a $1 trillion pay package for CEO Elon Musk. This would be the largest corporate pay deal in history.
Musk will not get any salary or cash bonus. He will only earn stock if Tesla meets big growth targets.
The plan gives Musk up to 423.7 million Tesla shares. This is about 12% of the company's current stock. The shares are split into 12 parts, called tranches.
Musk will only get these shares if Tesla achieves certain goals in market value and business performance.
Tesla is worth about $1.1 trillion today. To unlock the full plan, Musk must help grow the company's value to $8.5 trillion.
There are 12 steps to reach this. The first target is $2 trillion. Then the value must keep rising, mostly in steps of $500 billion, until it hits $8.5 trillion.
The targets must be "sustained." This means Tesla's value must stay above the level for at least 30 days and also for six months.
Tesla also set 12 business goals. These include launching robotaxis, building humanoid robots, and increasing profits.
There are also product milestones. Tesla must deliver 20 million vehicles in total. Another goal is to reach 10 million paid Full Self-Driving (FSD) subscriptions for three months in a row. Free trials will not count.
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Musk cannot sell the shares immediately, even if he earns them. Shares earned in the first five years will vest after 7.5 years. Shares earned later will vest at the 10-year mark.
Musk can vote with the shares once they are awarded. But he must stay as Tesla's CEO or in another approved role to actually receive them. If he leaves early, the unvested shares are lost.
Tesla's board says the package is needed to keep Musk focused on the company. They believe Musk is the only one who can deliver Tesla's future in AI, robotaxis, and robots.
Musk thinks Tesla's humanoid robot, Optimus, could one day make up 80% of Tesla's value. He even predicts Tesla could be worth $25 trillion.
But critics say Musk already owns 13% of Tesla and is motivated enough. They also worry the plan will dilute shareholder value and give Musk too much control.
Tesla shareholders will vote on the plan in November. A special committee of independent directors has already reviewed it.
Tesla says the new plan has stronger rules than Musk's old 2018 deal. That plan is still being challenged in court. Tesla also moved its legal base from Delaware to Texas, which has fewer restrictions.
If approved, Musk could get $1 trillion worth of stock over the next decade. This would give him even more power at Tesla and set a new record for CEO pay.