Image: Tesla
Tesla has unveiled an unprecedented new compensation proposal for CEO Elon Musk in its 2025 proxy statement, valued at as much as $1 trillion if all milestones are achieved.
The new 2025 CEO Performance Award spans 10 years and ties Musk’s potential payout to both Tesla’s market value and ambitious operational goals. For Musk to secure the full award, Tesla’s market capitalization would need to grow to $8.5 trillion — creating nearly $7.5 trillion in additional shareholder value.
The package is structured into 12 tranches, each worth roughly 1% of the company. To unlock a tranche, Musk must meet both a market cap milestone and a corresponding operational milestone. The first tranche, for example, would vest at a $2 trillion market cap and 20 million vehicles delivered. Tesla said in its proxy statement that it has produced 8 million vehicles to date.
Other milestones include 10 million active FSD subscriptions, delivery of 1 million AI-powered robots, and 1 million Robotaxis in commercial operation.
Tesla said in its proxy:
The 2025 CEO Performance Award similarly challenges Elon to again meet a series of even more aspirational goals, including operational milestones focused on reaching Adjusted EBITDA targets (thresholds that are up to 28 times higher than the 2018 CEO Performance Award’s top Adjusted EBITDA milestone) and rolling out new or expanded product offerings (including 1 million Robotaxis in commercial operation and delivery of 1 million AI Bots), all while growing the company’s market capitalization by trillions of dollars.
Tesla Board members Robyn Denholm and Kathleen Wilson-Thompson added:
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. Retaining and incentivizing Elon is fundamental to Tesla achieving these goals and becoming the most valuable company in history.
The Board created a special committee that spent seven months evaluating a range of compensation structures before settling on the new plan. Per Denholm and Wilson-Thompson, the goal was to design a package that both maximizes long-term shareholder value and keeps Musk incentivized to deliver on Tesla’s most ambitious targets.
They added that the new $1 trillion proposal builds on the framework of Musk’s 2018 CEO Performance Award — widely regarded as one of the most successful pay plans in corporate history — but updates it for Tesla’s current scale and future ambitions. The Board described the 2025 award as a more demanding evolution of the original, intended to push Tesla toward becoming the most valuable company in history.
“This is about shooting for the moon and having the whole company focused on delivering,” Denholm, who chairs Tesla’s Board of Directors, said in an interview.
The 2018 award, valued at over $50 billion today, was approved twice by shareholders but was later struck down by a Delaware court, leaving Musk’s compensation in limbo. Tesla continues to appeal the ruling. In the meantime, Musk was granted an interim $29 billion stock package last month, with the Board promising to present a long-term plan by the annual shareholder meeting in November.
If Musk earns all 12 tranches of the new award, his stake in Tesla would rise to at least 25%, with a 7.5-year holding period on any new shares awarded. The new compensation plan will be put to a shareholder vote at Tesla’s annual meeting on November 6.
