Tesla’s Board of Directors has announced on Friday a fresh compensation plan for Chief Executive Elon Musk, linking the potential payout to unprecedented growth targets, including a market capitalization of nearly $7.5 trillion.
Shortly after the announcement, Tesla shares are trading 2.20% higher at $346 during Friday’s pre-market trading session.
Outlined in a shareholder letter, the 2025 CEO Performance Award raises the bar well beyond Musk’s 2018 package.
“In 2018, Elon had to grow Tesla by billions; in 2025, he has to grow Tesla by trillions — to be exact, he must create nearly $7.5 trillion in value for shareholders for him to receive the full award,” the Board stated in the shareholder letter.
The new plan sets adjusted EBITDA goals that are up to 28 times greater than the highest milestone from the earlier award. Besides the pay package, the Board has also proposed Tesla’s investment in Musk’s xAI company.
“We believe that Elon’s singular vision is vital to navigating this critical inflection point,” the Board wrote in the letter.
“We also recognize the formidable nature of this undertaking and as a result, the importance of having a leader who is not only willing and capable but eager to meet this challenge,” the Members of the Special Committee of the Board Robyn Denholm & Kathleen Wilson-Thompson added.
It also ties rewards to large-scale deployment of next-generation products, including 1 million Robotaxis in operation and 1 million humanoid AI Bots delivered.
The award would vest over a period of at least seven and a half years and could stretch to a full decade.
Tesla’s board said the package was developed after a seven-month review by a special committee tasked with evaluating the company’s long-term strategic ambitions.
The company’s 2025 Annual Meeting of Shareholders will be held on November 6 at 3:00 p.m. Central Time.
Tesla did on Thursday a wide rollout of its Robotaxi app for iOS devices across the US and Canada as it plans to remove safety operator from the vehicles by the year end.
