5 Minutes
This is not investment advice. The author holds no positions in the stocks discussed. Tesla’s newest CEO compensation proposal outlines a long-shot — but technically feasible — route for Elon Musk to approach trillionaire status over the next decade. The plan is packed with ambitious performance gates tied to market capitalization, vehicle and software milestones, and escalating earnings targets.
How the package works — an overview
Under the draft proposal (still subject to shareholder approval), Musk could be awarded roughly $1 trillion in Tesla shares, but only if he helps create approximately $7.5 trillion in market value for the company by hitting a layered set of market cap thresholds. Each market-cap milestone must be accompanied by achieving either a revenue (sales) or an earnings KPI. Vesting is staged and contingent on sustained performance rather than short-term spikes.
Market-cap verification and anti-volatility guardrails
Each valuation milestone is deemed achieved only when a 30-day trailing average converges with a 6-month trailing average, a mechanism designed to ensure sustained stock performance rather than a temporary rally. That means market-cap goals are tied to persistent market confidence and not single-day volatility.
Operational and technology targets
The operational milestones are heavily technology-centric and reflect Tesla’s strategic priorities in electric vehicles (EVs), autonomy, robotics, and software monetization. Key targets include:
- Delivering 20 million cumulative EVs (Tesla has produced roughly 7 million to date).
- Growing Full Self-Driving (FSD) subscriptions to 10 million users.
- Scaling a robotaxi fleet to 1 million vehicles (today’s deployments are only in the dozens).
- Producing 1 million units of the Optimus humanoid robot (currently at zero).
Aggressive EBITDA climb
As of year-end 2024, Tesla’s trailing annual adjusted EBITDA was about $12.444 billion. The proposal ties several of the final vesting tranches to achieving adjusted EBITDA of $400 billion over four consecutive quarters — a staggering leap that would require exponential growth in margins, services revenue (FSD and robotaxi), and robotics revenue.
Timing, governance and legal context
Vesting is staged over many years, and Musk must remain CEO for at least the next 7.5 years to collect most of the award. At the end of the proposed 10-year window, he is expected to work with Tesla’s board on a framework for “long-term CEO succession.” The package also contemplates winding down certain political activities and authorizes potential investment in xAI.
Background: Musk previously received an interim $29 billion award (96 million restricted shares at a $23.34 exercise price). In 2024 a Delaware judge struck down Musk’s 2018 $56 billion award because of procedural defects and concerns about board influence, leading to complex litigation and shareholder votes that attempted to re-ratify the legacy plan. The court later reiterated that a re-ratification did not cure fiduciary breaches, keeping legal uncertainty in play.
Product features, comparisons and market relevance
Features: The package links equity to technology and product KPIs — notably EV deliveries, subscription-based FSD revenue, robotaxi scale, and Optimus production. Compared with traditional executive pay plans, this one is hyper-linked to product roadmaps and AI-driven monetization.
Comparisons: Typical CEO packages reward profitability or market-cap growth in simpler terms; Tesla’s proposal is more like a combined product roadmap and performance contract that forces alignment between corporate strategy (EVs, autonomy, robotics) and executive compensation.
Advantages & use cases: For investors and technologists, the plan signals Tesla’s continued pivot toward software-defined vehicles, autonomous mobility services, and humanoid robotics — markets with substantial recurring revenue potential if scale and safety hurdles are cleared. For Tesla, tying pay to durable averages reduces the risk of rewarding short-lived stock moves.
Bottom line
Elon Musk is not about to become an immediate trillionaire simply because of this proposal. The package creates an audacious, long-term incentive structure that hinges on massive growth in EV volumes, autonomous services, robotics production, and an almost unimaginable escalation in EBITDA. It’s a bet on AI, robotics, and software-driven monetization at scale — ambitious, risky, and legally complicated.
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