Tesla proposes CEO compensation plan for Musk with $7.5T value creation target
Tesla Inc. (NASDAQ: TSLA) announced a new compensation package for Chief Executive Officer Elon Musk that would require the company to reach a market capitalization of nearly $7.5 trillion for him to receive the full award, according to a shareholder letter.
The proposed 2025 CEO Performance Award includes operational milestones such as reaching adjusted EBITDA targets up to 28 times higher than the 2018 CEO Performance Award's top milestone. The package also requires deployment of 1 million Robotaxis in commercial operation and delivery of 1 million AI Bots.
The compensation structure includes a vesting period of at least seven and a half years and up to 10 years. Tesla's board appointed a special committee that conducted a seven-month evaluation process to design the package.
Tesla reported delivering its 8 millionth vehicle and deploying more than 37 gigawatt-hours of energy storage from the third quarter of 2024 through the second quarter of 2025. The company launched Robotaxis in Austin, Texas in June and signed an agreement with Samsung for chip production.
The shareholder proposal also seeks approval for amendments to Tesla's 2019 Equity Incentive Plan, including a special share pool for Musk's compensation and an additional 60 million shares for employee incentives. The board granted Musk a 2025 CEO Interim Award as part of previous compensation agreements.
Tesla moved its corporate domicile to Texas following shareholder approval at a previous meeting. The company added Jack Hartung as a new independent director and Audit Committee member.
Three board members are up for reelection: Ira Ehrenpreis, Joe Gebbia, and Kathleen Wilson-Thompson. The proxy statement includes multiple shareholder proposals and a management proposal to eliminate supermajority voting requirements.