Tesla has outlined a staggering $1 trillion compensation package for CEO Elon Musk, structured around ambitious market capitalization goals and product innovations over the next decade.
The plan, disclosed on Friday, ties Musk’s potential payout to raising Tesla’s market cap from its current $1.1 trillion to $8.5 trillion while meeting a series of operational benchmarks. If approved, the award would be among the largest executive compensation packages in corporate history, underscoring both Tesla’s confidence in Musk and the high bar set for future performance.
Stock-Based Structure
According to Tesla’s proposal, Musk could receive up to 423.7 million performance-based restricted shares, divided into 12 tranches. Each tranche is linked to both market capitalization milestones and operational achievements. Shares vest on a delayed schedule — after 7.5 years for the first half of the program and 10 years for the second half — provided Musk remains in his role as CEO or another board-approved executive position.
Financial Milestones
Tesla’s board has laid out 12 escalating market-cap targets, beginning at $2 trillion and rising in increments of $500 billion, followed by two $1 trillion jumps, culminating in $8.5 trillion. To count as achieved, each milestone must be sustained across a 30-day and six-month trailing average market value.
Product & Operational Goals
Beyond sheer market value, the plan ties compensation to ambitious business and technological milestones:
- 20 million Tesla vehicle deliveries in total.
- 10 million paid Full Self-Driving (FSD) subscriptions, averaged over three consecutive months.
- 1 million Optimus robots (AI-powered humanoid “Bots”) delivered, beginning from the grant date of September 3, 2025.
- 1 million robotaxis in commercial service, averaged over three successive months.
Additional operational targets include advances in robotics, autonomous driving, and profitability as measured by adjusted EBITDA.
Vesting and Forfeiture Rules
Musk earns the right to vote awarded shares once a tranche is unlocked by meeting its goals. However, he cannot fully control or sell them until the vesting schedule is complete. If performance targets are not achieved within the 10-year window, or if Musk steps down without board-approved conditions, the corresponding shares will be forfeited.
What It Means
The proposal reflects Tesla’s strategy to align Musk’s incentives with aggressive innovation and long-term shareholder value creation. It also signals that succession planning is becoming a board-level priority — the last two tranches of the award are contingent on Tesla formalizing a CEO succession plan.
If successful, the program could secure Musk’s role as one of the most highly compensated executives in corporate history while locking Tesla’s future to some of the boldest goals ever seen in the auto and tech industries.
FAQs
Q: How much could Elon Musk earn under Tesla’s new plan?
Up to $1 trillion in stock-based compensation, spread across 12 tranches over 10 years.
Q: What market cap does Tesla need to hit?
The company must grow from $1.1 trillion to $8.5 trillion, with sustained value over specific timeframes.
Q: What product milestones are included?
20 million Tesla deliveries, 10 million paid FSD subscriptions, 1 million Optimus robots, and 1 million commercial robotaxis.
Q: When do the shares vest?
Shares earned in the first five years vest at 7.5 years, while those earned later vest at the 10th year of the program.
Q: What happens if Musk leaves Tesla?
Unvested shares are forfeited unless in special cases such as qualifying terminations or a change in control.