Lead: On September 5–6, 2025, Tesla’s board approved a new performance-based pay package for CEO Elon Musk that could deliver up to $1 trillion in stock if ambitious operational and market-cap milestones are met, and the board said it sought assurances that Musk’s public political involvement would “wind down in a timely manner.”
Key Takeaways
- Tesla’s proxy proposes a pay award that could total roughly $1 trillion in stock tied to multi-year performance targets.
- The award is structured in 12 tranches totaling 423,743,904 shares; achieving all tranches would raise Musk’s stake to about 27%.
- The board required commitments that Musk reduce political engagement as part of securing his long-term leadership.
- Performance goals include large Adjusted EBITDA targets, product rollouts (1 million Robotaxis, 1 million AI Bots) and massive market-cap growth.
- Vesting and retention features span at least 7.5 years and up to 10 years, with structural protections against volatility.
- The proxy frames the package as necessary to retain Musk and execute Tesla’s next Master Plan.
Verified Facts
According to the board’s proxy filing filed in early September 2025, the proposed 2025 CEO Performance Award could deliver up to $1 trillion in stock-based compensation if a series of performance thresholds are met across automotive, energy and robotics/AI businesses. The award is divided into 12 performance tranches comprising 423,743,904 shares.
If every tranche vests, the filing states Musk would end up with roughly 27% ownership of Tesla. The proxy links the award to large-scale operational milestones, including adjusted EBITDA levels described as up to 28 times higher than the top Adjusted EBITDA milestone in the 2018 award.
The proxy also sets product and scale targets such as commercial deployment objectives for Robotaxis and AI-driven robots — for example, targets referencing 1 million Robotaxis in commercial operation and delivery of 1 million AI Bots — alongside requirements for dramatic market-cap increases (documents refer to trillions of dollars of shareholder value creation; the filing cites figures in the multi‑trillion dollar range).
As part of the board’s rationale, the committee said it sought assurances that Musk’s participation in political activities would decrease “in a timely manner.” The filing frames this pledge as a material factor in securing Musk’s continued commitment to lead Tesla long term.
Context & Impact
The package follows Tesla’s 2018 performance award framework but scales targets far higher to match the company’s current size and strategic ambitions. The board emphasizes retention, long-term succession planning led by the board with Musk’s active participation, and mechanisms to limit short‑term stock‑price effects during administration.
Supporters argue the award aligns Musk’s incentives with multi-decade company objectives: faster product rollouts, AI and robotics expansion, and continued growth in energy deployment. Detractors have raised governance and valuation concerns given the scale of potential payouts.
Potential impacts to monitor:
- Shareholder response at the upcoming meeting — approval is required for the award to proceed.
- Market reaction to vesting mechanics and any volatility‑mitigation provisions the board implements.
- Operational execution risk: meeting the package’s targets would require large, sustained advances in manufacturing, software, autonomous operations and energy businesses.
Official Statements
“Ultimately, the Committee believed it to be critical to Tesla to secure Musk’s commitment to Tesla, receive assurances that Musk’s involvement with the political sphere would wind down in a timely manner.”
Tesla Board of Directors (proxy filing)
Unconfirmed
- The filing and reporting note that Musk’s political activities have affected Tesla’s sales; the precise magnitude of any sales impact is not quantified in the proxy.
- Public commentary linking specific customer behaviors or revenue changes directly to Musk’s political engagement remains unverified.
Bottom Line
Tesla’s board has tied a very large, multi‑tranche compensation award to both aggressive business milestones and an explicit expectation that Elon Musk reduce his political involvement. Shareholder approval and, more importantly, execution on the operational targets will determine whether the award pays out and how the company balances governance, public engagement and strategic priorities going forward.