Tesla's compensation committee has negotiated a new performance award for CEO Elon Musk that could grant him up to 12% of the company's outstanding common stock, according to a regulatory filing.

The committee met with Musk ten times to discuss the framework for the 2025 CEO Performance Award. The award is structured as restricted stock contingent upon Musk remaining at Tesla for at least 7.5 years and achieving specific milestones.

The performance targets include bringing Tesla's market capitalization to $8.5 trillion and advancing four core product lines: vehicle fleet expansion, Full Self-Driving technology, Robotaxi services, and Tesla Bots. The committee described the $8.5 trillion valuation target as approximately twice the current market capitalization of NVIDIA (NASDAQ: NVDA).

During negotiations, Musk indicated he required at least a 25% voting interest in Tesla and assurances regarding payment for his previous 2018 CEO Performance Award to remain with the company. The filing states Musk raised the possibility of leaving Tesla to pursue other interests without these assurances.

The committee initially considered stock options similar to Musk's previous awards but ultimately selected the restricted stock structure. The award would require Tesla to record a significant accounting charge, though the committee believes the potential value creation justifies the cost.

The agreement also includes provisions for Musk to wind down his political involvement and participate in long-term succession planning led by Tesla's board. The committee's existence was previously disclosed in Tesla's quarterly report filed in April 2025.