Tesla is asking investors to approve yet another outsized pay plan for CEO Elon Musk, according to a financial filing out Friday.
The proposed compensation plan for Musk, already the world’s wealthiest individual, consists of 12 tranches of shares to be granted if Tesla hits certain milestones over the next decade. It would also give Musk increased voting power over the EV maker and aspiring robotics titan, which he has publicly demanded since early 2024.
Tesla Chairwoman Robyn Denholm told CNBC’s Andrew Ross Sorkin the plan was designed to keep the CEO “motivated and focused on delivering for the company.”
“If he performs, if he hits the super ambitious milestones that are in the plan then he gets equity — it’s 1% for each half a trillion dollars of market cap, plus operational milestones he has to hit in order to do that,” Denholm said on CNBC’s “Squawk Box.”
The full award would give Musk more than 423 million additional shares.
Tesla one-day stock chart.
To obtain the first award in the plan, Musk and Tesla would need to almost double their current market cap to reach $2 trillion, while also hitting a production and deliveries milestone of a cumulative 20 million vehicles.
Among the additional targets for Musk to reach in the 2025 CEO Performance Award: Adjusted EBITDA targets, rolling out product offerings “including 1 million Robotaxis in commercial operation and delivery of 1 million AI Bots” and ultimately “he must create nearly $7.5 trillion in value for shareholders for him to receive the full award.”
Musk has remained politically embroiled, while also running a collection of companies, including aerospace and defense contractor SpaceX, drilling venture The Boring Company, health tech company Neuralink and the artificial intelligence venture, xAI, which has merged with his social network, X.
Tesla also said in the filing Friday that it will ask shareholders at the Nov. 6 meeting to vote on whether the company should invest in Musk’s newest venture, xAI.
Musk first floated the idea publicly with an informal poll on X last July, asking whether Tesla should invest $5 billion into xAI.
Founded in early 2023 in Nevada, xAI merged with Musk’s social network X earlier this year. The company now operates a massive data center in Memphis, and plans to build out another facility there, to help train and run its large language models and a chatbot called Grok.
Pay plan controversy
The new pay proposal for Musk comes after the Delaware Court of Chancery ruled last year that his 2018 pay plan was excessive, had been improperly granted by the Tesla board and must be rescinded.
In that case, Tornetta v. Musk, a judge found that the Tesla CEO had controlled pay negotiations at the automaker, and his board of directors failed to give shareholders information that they were legally entitled to before telling them they should vote to approve Musk’s performance-based pay plan.
The case is now on appeal.
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