The management board of electric car maker Tesla has proposed a paid package for CEO Elon Musk that could make him the world’s first sign, but only if he meets a set of high performance standards over the next decade.
The proposal was published Friday as part of the company’s regulatory submission.
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Musk is already considered one of the richest businessmen in the world, and one of his eye-opening wage packages from 2018 continues to be the subject of a legal battle.
However, if approved, the latest proposal will likely be the largest corporate pay package in US history.
Tesla shareholders will vote for the remuneration plan on November 6th. The regulator’s submission indicated that the plan was already under review by a committee of independent directors.
“It’s an incredibly big salary package. It raises a lot of questions,” Brian Quinn, a professor at Boston College Law School, told news agency Reuters.
Quinn added that he has little doubt as to how shareholders will vote.
“I think they’ll approve this package given that Tesla stock is basically all vibes and that it seems to have little to do with the actual performance of the automaker.”
In a regulatory filing, Tesla leaders showed that despite the recent wobble on Wall Street by the automaker, they felt the masks deserved a higher coverage.
“The traditional compensation packages given to executives from other companies were deemed unsuitable for designing Musk’s incentive compensation,” Filing explained.
What is the term?
To win the trillion-dollar wage package, Musk met Tesla’s ambitious benchmarks, turning down sagging sales and increasing total value and car production over the next decade.
In the short term, masks should increase Tesla’s valuation to $2 trillion. By the end of the plan, Tesla had to reach a value target of $8.6 trillion.
Currently, the company is worth around $1.03 trillion. This is roughly the same amount as the proposed reward package.
By the end of the 10-year term, Tesla would have had to deliver 20 million vehicles in total. Last year, the company delivered just under 2 million vehicles.
Other benchmarks include the provision of 1 million autonomous robotaxies and 1 million artificial intelligence (AI) bots running.
As part of the 10-year plan, Musk will need to develop a long-term “framework” to cite his successor as Tesla CEO.
All mask compensation in the proposed pay package will be in the form of Tesla stocks given based on performance metrics. He received no pay or cash bonuses.
Musk will need to stay at the company for at least seven and a half years to cash out any of the stocks he has acquired. If he stays for 10 years until 2035, he is eligible for the full amount.
Musk currently holds approximately 13% of Tesla’s stake. The plan puts another 12% within his reach. It would give him more power at shareholder meetings.
Legal scrutiny of compensation
This is not the first time Tesla has tried to compensate Musk handsomely for his leadership in the automotive company.
In 2018, Tesla announced a similar 10-year plan. It is expected to give Mask nearly $55.8 billion at the time in stocks and other awards.
But the pay system is tied to lawsuits after shareholders challenged the amount in Delaware courts. Twice, the compensation package was struck by concerns that it had been unfairly negotiated, and Musk allegedly placed his finger on the scale.
Tesla appealed the decision to the Delaware Supreme Court, and in June 2024, the company’s shareholders voted to revive the pay package.
The board also approved a Musk interim compensation package worth around $29 billion this year, with the requirement that it remained CEO until 2030.
Last year, Tesla also moved the establishment of its business from Delaware to Texas in a move that is speculated to avoid further legal hurdles.
Musk herself has been scrutinized in recent months for her close relationship with President Donald Trump.
Musk’s political ambition
In the wake of an attempt to assassinate Trump in July 2024, Musk supported the Republican leader’s reelection bid and threw himself into campaigning and fundraising.
Trump took Musk in turn as his close advisor. A few days after winning the election in November, Trump announced that Musk would join his second administration as head of a new government organization called the Government Efficiency or Doge Bureau.
Trump’s reelection coincided with record highs in Tesla stocks last year.
But Musk’s short tenure as a “special government employee” has led to backlash against his tech brand, as well as his efforts to support far-right parties in Europe, especially ahead of the German federal election in February.
After Musk took the lead role in a massive federal layoff, protests erupted outside of US Tesla dealers and the apparent dismantling of several independent institutions, such as the US Agency for International Aid (USAID).
Some critics questioned whether Musk has a conflict of interest in attacking certain institutions like the Consumer Financial Protection Agency, or whether he would access the majority of government data that could be used to benefit his business.
However, special government employees will only serve the government for 130 days a year.
By the end of Musk’s term in the Trump administration, he and the Republican president had been defeated over Trump’s efforts to pass a massive spending package known as one big beautiful bill.
Musk accused the bill passed in July of financial irresponsibility, and he and Trump made public trade in the humiliation, and Musk threatened to launch an American Party, a political movement of his own rival.
Tumult is believed to have been a 25% decline in Tesla shares this year due to intensifying competition with rival electric car makers.
In July, European Union sales fell by around 40%, while Chinese rival BYD saw an increase in purchases.
Tesla’s latest quarterly profit plunged from $1.399 billion to $49 million. Variations are related to some observers.
