The Tesla board on Friday proposed a new pay package for CEO Elon Musk worth nearly $1 trillion over the next decade if he and the EV giant hit a series of performance targets. Tesla stock advanced during Friday's stock market.
Under the proposal, outlined in a letter to shareholders Friday, Musk must meet a series of goals to receive the full compensation package. The milestones include 20 million Tesla vehicles delivered, 10 million active full self-driving subscriptions, 1 million Optimus robots delivered and 1 million robotaxis in commercial operation all while growing the company's market capitalization by trillions of dollars.
"In 2018, Elon had to grow Tesla by billions; in 2025, he has to grow Tesla by trillions — to be exact, he must create nearly $7.5 trillion in value for shareholders for him to receive the full award," chair Robyn Denholm said in the letter to investors.
Musk will receive no salary or bonus under the plan, but will collect shares in installments unlocked by increases in Tesla's market value. The 2025 compensation plan would award Musk a total of 423 million additional shares of TSLA and give the world's richest man increased voting power, something he has repeatedly stated he needs before unlocking additional Tesla value. Musk sold a substantial amount of Tesla stock to purchase Twitter, now X.
"Retaining and incentivizing Elon is fundamental to Tesla," the letter states and the pay package is "designed to align extraordinary long-term shareholder value with incentives that will drive peak performance from our visionary leader."
Denholm told CNBC early Friday that if Musk performs and hits the ambitious milestones he then 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."
The pay package and other measures, including investment in Musk's xAI company, will be voted on by Tesla shareholders during the annual meeting on Nov. 6.
Tesla To 'Honor Bargain' Under 2018 Pay Deal
Meanwhile, another proposal for shareholders would grant Musk any and all shares from the massive 2018 pay package that he might lose in Delaware courts.
"Proposal Three would, among other things, help ensure that Tesla can honor its bargain with Mr. Musk under the 2018 CEO Performance Award," according to the SEC filing.
In early August, Tesla's board approved an interim Elon Musk pay deal partially covering the 2018 pay deal worth about $30 billion, consisting of 96 million shares.
This pay package does not appear to have new performance targets for Musk or Tesla.
Tesla Stock Performance
TSLA jumped 3.6% to 350.84, hitting 355.87 intraday, in Friday's stock market, adding to a 1.3% gain on Thursday. Tesla stock continued to put a little more distance from the 21-day and 200-day moving average on Thursday and Friday after regaining those levels Wednesday. A move above Wednesday's intraday high of 343.33 offered an aggressive entry into TSLA stock.
Investors also could use the Aug. 27 short-term high of 355.39 as an early entry. The traditional consolidation buy point is 367.71, according to MarketSurge charts.
TSLA stock is showing higher lows and generally higher highs in recent weeks, a positive trend. However, the EV giant has flashed aggressive entries three times in the current base, only to quickly fall back.
The relative strength line for Tesla stock has been moving sideways in recent weeks, reflecting Tesla stock's trend of generally moving with the market.
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Tesla stock has a 60 Composite Rating out of a best-possible 99. The stock also has an 82 Relative Strength Rating and a 53 EPS Rating.
Please follow Kit Norton on X @KitNorton for more coverage.
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