Tesla has unveiled a $1 trillion compensation plan for its CEO, Elon Musk, which is contingent upon the company’s market capitalization growing from approximately $1.1 trillion to $8.5 trillion and meeting several operational targets. The plan, announced on Friday, will grant Musk up to 423.7 million performance-based restricted shares, equivalent to about 12% of the company’s current shares. These shares will be split into 12 equal tranches, with the last two quotas requiring a board-approved CEO succession plan.
The compensation plan is tied to 12 market-capitalization targets, starting at $2 trillion for the first milestone, followed by nine increases of $500 billion each, and finally two $1 trillion milestones. To meet these targets, Tesla’s market capitalization must be “sustained,” meaning the company must maintain both a 30-day and a six-month trailing average market value.
In addition to the market-capitalization targets, Tesla has set 12 operational milestones, including the rollout of robotaxis and robots, as well as increasing profits as measured by adjusted EBITDA. The company has also established four product goals, which include delivering 20 million Tesla vehicles, achieving 10 million paid Full Self-Driving subscriptions, delivering 1 million “Bots” (AI robots like Optimus), and having 1 million driverless robotaxis in commercial service.
Once a tranche is earned, Musk will be able to vote the awarded shares, which will vest either 7.5 or 10 years after the start of the award program. However, Musk must remain Tesla’s CEO or be in another approved executive role at the time of vesting to receive the shares. If any goals are not met by the end of the 10-year program, the associated awards will be forfeited. Furthermore, if Musk stops serving in an approved role, all unvested shares will be forfeited, except in certain cases like qualifying terminations or a change in control.
The proposed compensation plan reinforces the company’s ambitious growth targets and its commitment to innovation and expansion. As Tesla continues to navigate the evolving electric vehicle market, the success of this plan will depend on the company’s ability to meet its operational and market-capitalization targets. With its sights set on significant growth and innovation, Tesla’s future prospects will be closely watched by investors and industry observers alike.