The governing board for the electric carmaker Tesla has put forward a pay package for CEO Elon Musk that could make him the world\u2019s first trillionaire \u2014 but only if he meets a series of high-performance standards over the next 10 years.<\/p>\n\n\n\n
The proposal became public on Friday, as part of the company\u2019s regulatory filings.<\/p>\n\n\n\n
Musk is already considered one of the world\u2019s wealthiest businessmen, and one of his eye-popping pay packages from 2018 continues to be the subject of a legal battle.<\/p>\n\n\n\n
But if approved, the latest proposal would likely be the largest corporate pay package in United States history.<\/p>\n\n\n\n
Tesla shareholders will vote on the compensation scheme on November 6. The regulatory filing indicated that the plan had already undergone a review from a committee of independent directors.<\/p>\n\n\n\n
\u201cThis is a ridiculously large pay package. It raises lots of questions,\u201d Brian Quinn, a professor at Boston College Law School, told the news agency Reuters.<\/p>\n\n\n\n
Quinn added he had little doubt about how the shareholders will vote.<\/p>\n\n\n\n
\u201cGiven that Tesla\u2019s stock price is basically all vibes and appears to have very little to do with the automaker\u2019s actual performance, I suspect they will approve this package.\u201d<\/p>\n\n\n\n
In the regulatory filing, Tesla leaders indicated that they felt Musk deserved the higher compensation range, despite the carmaker\u2019s recent wobbles on Wall Street.<\/p>\n\n\n\n
\u201cTraditional compensation packages granted to executives at other companies were determined to not be appropriate for designing Mr. Musk\u2019s incentive compensation,\u201d the filing explained.<\/p>\n\n\n\n
To earn the trillion-dollar pay package, Musk would have meet ambitious benchmarks for Tesla, reversing its drooping sales and increasing its total value and car production over the next decade.<\/p>\n\n\n\n
In the short term, Musk would have to boost Tesla\u2019s valuation to $2 trillion. By the end of the plan, Tesla would have to reach a value target of $8.6 trillion.<\/p>\n\n\n\n
Currently, the company is worth about $1.03 trillion \u2014 roughly the same amount as the proposed compensation package.<\/p>\n\n\n\n
By the end of the 10-year term, Tesla would have also had to deliver 20 million vehicles in total. Last year, the company delivered just under 2 million vehicles.<\/p>\n\n\n\n
Other benchmarks include putting a million self-driving robotaxis in operation and delivering one million artificial intelligence (AI) bots.<\/p>\n\n\n\n
As part of the 10-year plan, Musk would also have to develop a long-term \u201cframework\u201d to name a successor as Tesla\u2019s CEO.<\/p>\n\n\n\n
All of Musk\u2019s compensation in the proposed pay package would come in the form of Tesla shares, given based on performance metrics. He would receive no salary or cash bonuses.<\/p>\n\n\n\n
Musk would have to stay with the company for at least seven and a half years to cash out any of the shares he earns. If he stays until 2035, for the full 10 years, he would be eligible for the full amount.<\/p>\n\n\n\n
Currently, Musk holds about 13 percent of Tesla\u2019s shares. The plan puts an additional 12 percent in his reach. That would give him greater power in shareholder meetings.<\/p>\n\n\n\n
This is not the first time Tesla has sought to compensate Musk handsomely for his leadership at the car company.<\/p>\n\n\n\n
In 2018, Tesla unveiled a similar 10-year plan, slated to give Musk nearly $55.8bn at the time in stocks and other awards.<\/p>\n\n\n\n
That pay scheme has been tied up in litigation, however, after a stockholder challenged the amount in a Delaware court. Twice, that compensation package was struck down over concerns that it was unfairly negotiated, with Musk allegedly putting his finger on the scale.<\/p>\n\n\n\n
Tesla has appealed the decisions to the Delaware Supreme Court, and in June 2024, company shareholders voted to reinstate the pay package.<\/p>\n\n\n\n
Its board also approved an interim compensation package for Musk this year worth about $29bn in stock, on the condition he remains as CEO until 2030.<\/p>\n\n\n\n
Last year, Tesla also moved its business incorporation from Delaware to Texas, in a move speculated to help avoid further legal hurdles.<\/p>\n\n\n\n
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