Elon Musk is back at the center of Tesla’s future as the board officially proposed an enormous compensation package worth almost $975 billion. The new plan-which will be presented to investors in November would give Musk more control of voting power, while still ensuring Musk remains the public face steering the direction of Tesla.
The package is divided into 12 tranches of share options according to the achievement of several performance criteria. Each tranche is locked until Tesla achieves extraordinary levels of market value and achieves certain thresholds in the operation. Some of the highlights include Tesla’s first reward for reaching a $2 trillion market cap, with the full payout potentially being as much as $8.5 trillion.
If Musk succeeds in all this, he would get over $423 million extra shares. That would increase his stake ensuring his control over Tesla for the next decade. This is all to say that Musk has been calling for this very moment since around early 2024, when he clearly made his intentions known that such a voting power was a strong preference for him to continue pursuing his vision of making Tesla other than a car company.
The near-term effect of that statement is to assure markets of leadership continuity at Tesla. Even though Musk spreads his attention among SpaceX, Neuralink, The Boring Company, and xAI, the board is centering Musk as the irreplaceable figure for Tesla’s future. Chairwoman Robyn Denholm called the package a motivator and goal setter for Musk. Tesla’s board clearly believes that he remains the best driver of innovation for Tesla, despite criticism of his divided attention and political battles.
From an investor’s point of view, the deal has two sides. On the one hand, it has gone a long way to tying Musk’s compensation closely to success. He can only win big if Tesla becomes big. On the other hand, milestones like 20 million vehicles and a Robotaxi fleet are very ambitious goals that might not happen.
Tesla is currently facing a sales decline with aging models and heavy competition from China. If growth cannot achieve traction and sustain itself, then it is likely that market capitalization will never reach the trillions. Investors will be curious about whether the package is viable, or just a way to increase Musk’s control over Tesla.
