Elon Musk addresses shareholders about his historic Tesla Musk compensation package.
Introducing a historic and unprecedented proposal on Tesla Musk compensation package
Tesla’s board has proposed a new pay package for the world’s richest person and Tesla CEO Elon Musk. But which could be the largest corporate pay package in history. This package is worth 1 trillion dollars (about Rs 83 lakh crore). But to get this, Musk will have to meet some extremely ambitious targets for Tesla. This proposal highlights Tesla’s dependence on Musk, his plan to make the company a superpower in the field of AI and robotics, as well as its deep impact on cooperate governance. Also, on September 5, 2025, Tesla announced this proposal in a regulatory filing. This package is about 18 times larger than Musk’s 2018 package, which was worth $ 56 billion and which was canceled by a Delaware court. But if this package is completed, Musk can become the world’s first trillionaire.
Key terms, targets and structure of the payment package
Musk will receive this payment in the form of Tesla shares which are divided into 12 tranches. To unlock each tranche, Tesla will have to simultaneously meet a pair of market capitalization and operational specific targets. Also, the market capitalization target is also Tesla’s current market capitalization is about a trillion dollars. And for Musk to get the full payment, the company’s market capitalization will have to reach 8.5 to 8.6 trillion dollars in 10 years, which is about eight times more than its current valuation and this can make Tesla the most valuable company in the world. Also twice the valuation of the currently most valuable company Nvidia. Tesla will have to reach a market capitalization of 2 trillion dollars in the early stages itself.
Talking about operational targets on Tesla Musk compensation package
Vehicle delivery Tesla will have to achieve annual delivery of 20 million (2 crore) vehicles. In 2024, Tesla delivered less than 2 million vehicles. This target is about three times the total vehicle sales of Tesla so far. Also, the robotaxi company will have to put 1 million (10 lakh) self-driving robotaxi in commercial operation and Tesla has started this service with a handful of robotaxi in Austin in June 2025, but it is behind competitors like Waymo. Optimus Humanoid Robot Tesla will have to manufacture and distribute 1 million (10 lakh) Optimus robots. Musk believes that in the future 80% of the value of Tesla will come from these Optimus robots and this can take the valuation of the company to $ 25 trillion. Other financial targets Apart from these, the goals also include taking adjusted EBITDA to $ 400 billion and achieving 10 million active FSD subscriptions.
Historic scale and desire to increase control Tesla Musk compensation package
This proposed package is unprecedented in the history of corporate America. Also, if this package is completed, Musk can become the world’s first trillionaire. His current net worth is estimated to be around 378 to 430 billion dollars. Musk has also said that he wants about 25% voting control in Tesla so that he can make long-term risky decisions like AI and robotics, but without enough control, he would prefer to develop these products outside Tesla. Currently, his stake is about 13%, which was reduced after selling shares to buy Twitter (now X), but this package can give him this control by increasing his stake. Also, Musk will have to remain as Tesla’s CEO for at least 7.5 years only then he will be able to get some shares. To get the full payment, he will have to lead the company for a full 10 years. Also, to get the 11th and 12th installments of the package, Musk will have to create a framework for selecting a new CEO as his successor.
Concerns over cooperative governance
Many experts and investors believe that this package is absurdly large. And poses a threat to cooperative governance. Critics argue that Musk is already the company’s largest shareholder. So they already have enough incentive to make the company successful. This package can weaken the shares and harm the interests of small shareholders. Also, Boston College Law School professor Brian Quinn called it a ridiculously large pay package and said that Tesla changed its incorporation to Texas to avoid Delaware’s questions.
Texas legal structure and Delaware dispute
The proposal of such a large package has been possible because Tesla has changed its incorporation from Delaware to Texas. The Delaware court had termed Musk’s 2018 package unimaginable and unfair to shareholders, saying that the board was not independent and Musk had excessive influence on the negotiation. Tesla has appealed against this ruling. Also, under the new law of Texas, companies can make a rule that only those shareholders can sue who have 3% or more shares of the company. Apart from Musk, only a few institutional investors have such a large stake. Due to which the possibility of legal challenges has decreased.
Musk’s political leanings and the impact on Tesla’s performance
In recent months, Musk’s association with US President Donald Trump and His political activities have raised concerns among investors. He was also a special government employee in the Trump administration and led efforts to cut government spending. In July 2024, Musk announced the founding of a new political party called the America Party. Tesla’s decision will not only define the future of the company but also set a precedent for the future of incentives and leadership in Cooperate America. It will also be interesting to see whether Musk is able to achieve his ambitious goals or this package remains a lesson in corporate history.
Shareholder reaction and November 2025 vote
The proposal will be voted on at Tesla’s annual shareholder meeting to be held on November 6, 2025. Musk will also be able to vote his shares in favor of this proposal with about 13% of voting power, making it more likely to pass. But some investors, such as the New York State Comptroller, have proposed removing Texas’ 3% rule. Which limits the rights of shareholders. Analysts have mixed opinions. Dan Ives of Wedbush called this package a smart move, while Sam Abuelsamid of Telemetry expressed concern that Musk’s controversial statements could turn off potential customers.
Conclusion: Tesla Musk compensation package
Tesla’s proposal is undoubtedly very ambitious. On one hand, it shows Musk’s vision and the board’s strong belief in Tesla’s growth potential. On the other hand, it raises serious questions about corporate governance and shareholder rights. If Musk succeeds in achieving these goals, Tesla could become the world’s most valuable company and Musk the world’s first trillionaire. But gHis political activities have raised concerns among investors. He was also a special government employee in the Trump administration and led efforts to cut government spending. In July 2024, Musk announced the founding of a new political party called the America Party. Tesla’s decision will not only define the future of the company but also set a precedent for the future of incentives and leadership in Cooperate America. It will also be interesting to see whether Musk is able to achieve his ambitious goals or this package remains a lesson in corporate history.
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