Members of the Tesla Inc. TSLA board of directors unveiled a striking new compensation plan for CEO Elon Musk that could be worth as much as $1 trillion, setting the stage for one of the largest pay packages ever seen in corporate America.
What Happened: The proposal, outlined in a proxy filing on Friday, ties Musk’s payout to a series of aggressive targets over the next decade. The new plan proposed by the board members would grant Musk the first of 12 tranches of Tesla shares if the company reaches at least $8.5 trillion market capitalization from its current $1 trillion value, an SEC filing showed on Friday.
“The first tranche milestone is a market capitalization of $2 trillion; the next nine tranches thereafter each require an additional $500 billion in market capitalization for the shares underlying such tranche to become Earned Shares,” the board said.
The board also added that the 11th and 12th tranches would require a market capitalization of $7.5 trillion and $8.5 trillion and approval from the board. “In 2025, he has to grow Tesla by trillions,” the board said. Acquiring the shares would give Musk more control over Tesla.
According to the filing, Musk’s new pay package would grant him stock awards worth up to $900 billion. The plan will be voted on by shareholders at Tesla’s annual meeting scheduled for November 6.
Why It Matters: The news comes as the Tesla board had unveiled a $29 billion pay package for Musk, which would grant the CEO over 96 million shares of the company.
The new package came after a court in Delaware had struck down a $56 billion pay package for Musk, which was previously approved by the Tesla board. Musk had also shared fears of losing control over Tesla and had denied having any personal loans tied to his stake in the company.
Meanwhile, Tesla recently unveiled its Master Plan IV, which would focus on Robotics and AI, as Musk recently predicted that the Optimus line of robots would make up over 80% of Tesla’s future value.
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