Tesla’s board proposed a compensation package for CEO Elon Musk that would catapult the tech entrepreneur’s wealth above $1 trillion if the company fulfills a set of rigorous benchmarks over the next decade, according to a securities filing on Friday.
Musk would rake in roughly $900 billion over the duration of the agreement, making him the best-compensated CEO ever recorded.
The full compensation would only be delivered if Musk vaults the company from its present value of $1.1 trillion to $8.5 trillion, a figure that exceeds the current combined market values of Meta, Microsoft and Google-parent Alphabet, the filing says.
The compensation package also includes a set of production goals, including one million Robotaxis in commercial operation and the delivery of one million humanoid robots over the next 10 years. The compensation proposal requires approval from Tesla shareholders.
Musk, considered the world’s richest person, currently boasts a net worth of about $430 billion, according to Forbes. If he were to receive the full pay package, Musk would become the world’s first-ever trillionaire.
A detailed set of compensation tranches and company benchmarks would help ensure that Musk remains at Tesla over a long-term period and aligns his performance with the company’s financial success, board members Robyn Denholm and Kathleen Wilson-Thompson said in a letter to Tesla shareholders.
“Tesla does not currently have a long-term CEO performance award in place to retain and incentivize Elon to focus his energies on Tesla and lead us through this pivotal moment in our history. It’s time to change that,” Denholm and Wilson-Thompson wrote.
Seth Goldstein, an analyst at research firm Morningstar who verified an ABC News estimate of the potential value of the compensation proposal, said the payment plan would help ensure Musk’s continued focus on Tesla.
“It rewards Musk for growing Tesla’s market cap and delivering strong shareholder returns,” Goldstein said. “This removes a key near-term risk for the stock if Musk were to leave Tesla.”
Tesla CEO Elon Musk is pictured as he attends the start of the production at Tesla’s “Gigafactory” on March 22, 2022 in Gruenheide, southeast of Berlin.
Patrick Pleul/POOL/AFP via Getty Images
The pay package would also increase Musk’s ownership stake in Tesla, affording him greater control over the firm, Goldstein noted. Musk has long-pursued a larger ownership stake.
The company’s new compensation package arrives as Musk’s previous payment plan remains in legal limbo.
Last year, a Delaware judge twice struck down a $50 billion pay package for Musk put forward by the company in 2018.
Chancellor Kathaleen McCormick of the Court of Chancery, which litigates corporate governance litigation for companies incorporated in Delaware, initially declared that the negotiations surrounding the package had been inappropriate, due to a lack of independence among board members and problematic influence by Musk over those negotiations.
In a second ruling, McCormick decided that an additional shareholder vote on the compensation package — even if made with full knowledge of the initial problems surrounding the negotiation of the agreement — could not undo those problems. Musk has appealed the ruling.
Tesla’s profits fell 16% over a three-month period ending in June that overlapped with the end of Musk’s time as a “special government employee” with the Trump administration and his ensuing public clash with President Donald Trump, an earnings release in July showed.
The losses marked the second consecutive quarterly revenue drop for the company.
Musk’s work with the Trump administration, which ended in May, set off demonstrations at Tesla dealerships worldwide in protest of his effort to slash government spending as leader of the Department of Government Efficiency.
On an earnings call with analysts after the second quarter results were released, Musk fielded a question about his control of the company, which a Morgan Stanley analyst said was 13%.
“As I mentioned before, I think my control of Tesla should be enough to ensure that it goes in a good direction, but not so much control that I can’t be thrown out if I go crazy,” Musk said in jest.
