Tesla Board Proposes Up to $1 Trillion Pay Package for Elon Musk Amid Shareholder Vote

Tesla's board of directors has put forward a new compensation package for CEO Elon Musk, potentially valued at up to $1 trillion, which shareholders are set to vote on in November. The unprecedented proposal aims to incentivize Musk to remain at the helm and drive the company's ambitious transformation into an AI and robotics powerhouse. This comes as the electric vehicle maker faces scrutiny over its recent performance and a pending appeal regarding a previous compensation plan.

The proposed package outlines a series of demanding operational and financial milestones Musk must achieve by 2035 to unlock the full award. These targets include delivering 20 million vehicles, deploying 1 million robotaxis, securing 10 million Full Self-Driving (FSD) subscriptions, producing 1 million humanoid robots, reaching $400 billion in annual earnings before interest, taxes, depreciation, and amortization (EBITDA), and boosting Tesla's market capitalization to $8.5 trillion. The board argues that these "daunting and challenging" goals are essential to motivate Musk.

Critics, however, contend that some of these benchmarks are "watered-down versions" of past promises and are more achievable than they appear. For instance, the 20 million vehicle target includes units already delivered, and the definition of "robotaxi" and "FSD" has been adjusted, with FSD now requiring active driver supervision. Concerns have also been raised about the independence of Tesla's board, which includes Musk's brother and personal friends.

The new proposal follows a 2018 compensation package, valued at $55.8 billion, which was struck down by a Delaware court earlier this year. The court ruled that Musk had improperly influenced the board in securing that deal, a decision currently under appeal. Tesla's board maintains that a significant incentive is crucial to retain Musk, especially given his involvement in other ventures like SpaceX and xAI.

The announcement arrives amidst a challenging period for Tesla, with global EV sales falling, profits declining, and increased competition from rivals. Some analysts attribute these struggles, in part, to Musk's outspoken political views, which have reportedly alienated a segment of Tesla's customer base. Despite these headwinds, Musk recently purchased $1 billion in Tesla shares, signaling confidence in the company's future.