- Tesla proposed a new compensation plan for Elon Musk, tied solely to achieving set milestones and value creation.
- The package would grant Musk up to 423.7 million Tesla shares over 10 years as targets are met, with no base salary involved.
- The plan could increase Musk’s voting power by about 12% but still allows shareholders to counter major decisions.
- Executive director Shane Goodwin of SMU Corporate Governance Initiative and former Tesla board advisor, said the plan prioritizes rigorous performance benchmarks over promises.
- The proposal follows the voiding of Musk’s previous $50 billion package by a Delaware court, and must now be approved by shareholders.
Tesla has introduced a new compensation package for CEO Elon Musk, with the plan designed to reward Musk only if the company achieves specific milestones and delivers shareholder value. The proposal comes after Musk’s previous pay package, valued at over $50 billion, was voided by a Delaware court in 2023.
The new plan could be worth about $1 trillion and would give Musk up to 423.7 million shares in the company, to be distributed over a ten-year period if the company meets goals such as increased earnings, higher vehicle deliveries, and advancements in new products like robotaxis and humanoid robots.
According to Shane Goodwin, Executive Director of the SMU Corporate Governance Initiative and advisor to Tesla’s special board committee, the plan is structured to avoid paying Musk for unfulfilled promises. Goodwin explained in a commentary on Fortune that, “While headlines are focusing on the numbers, this plan focuses on real results for Tesla and its shareholders — sustained market capitalization milestones, staggering adjusted EBITDA hurdles, real-world product deployment and Elon remaining in a leadership role at the company and developing the next generation of leaders — for Elon to get paid and receive any additional voting influence over Tesla’s strategic direction.”
The package aims to strengthen Musk’s leadership at Tesla as the company enters a new phase focused on Artificial Intelligence, robotics, and growth in core areas. Goodwin added, “Tesla’s approach stands out for its rigor and emphasis on accountability.” The new deal would give Musk a significant voting boost, but not enough to prevent shareholders from overturning key decisions.
Shareholders must vote to approve the compensation plan before it takes effect. Tesla stock has climbed roughly 7% this year and almost doubled over the past 12 months.
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