Tesla proposes new $2T pay plan for Musk tied to ambitious milestones

Tesla is asking investors to approve another substantial pay plan for CEO Elon Musk that would grant him over 423 million additional shares across 12 tranches tied to ambitious milestones over the next decade. The proposal would also increase Musk’s voting control over the electric vehicle and robotics company, addressing demands he has made publicly since early 2024.

What you should know: The compensation structure requires Tesla to nearly double its current market cap to $2 trillion while hitting aggressive operational targets.

• Musk would receive 1% equity for each half-trillion dollars of market cap growth, plus meeting production and delivery milestones including 20 million cumulative vehicles.
• Additional targets include deploying “1 million Robotaxis in commercial operation and delivery of 1 million AI Bots” and creating nearly $7.5 trillion in shareholder value for the full award.
• Tesla Chairwoman Robyn Denholm said the plan was designed to keep Musk “motivated and focused on delivering for the company.”

The big picture: This latest pay proposal emerges as Musk juggles multiple companies while facing legal challenges over his previous compensation package.

• The Delaware Court of Chancery ruled last year that Musk’s 2018 pay plan was excessive and improperly granted, ordering it be rescinded in the Tornetta v. Musk case, which is now on appeal.
• Musk currently runs SpaceX, The Boring Company, Neuralink, and xAI, which has merged with his social network X, while remaining politically active.

What else is on the table: Tesla will also ask shareholders at the November 6 meeting to approve investing in Musk’s AI venture xAI.

• Musk first floated this idea in July with an informal poll on X, asking whether Tesla should invest $5 billion into xAI.
• Founded in early 2023, xAI operates a massive data center in Memphis with plans for additional facilities to train and run its large language models and Grok chatbot.

What they’re saying: Tesla’s board chair defended the compensation structure during a CNBC appearance.

• “If he performs, if he hits the super ambitious milestones that are in the plan then he gets equity — it’s 1% for each half a trillion dollars of market cap, plus operational milestones he has to hit in order to do that,” Denholm explained on “Squawk Box.”