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Investing.com -- Tesla has proposed a new 2025 CEO Performance Award for Elon Musk that would require him to grow the company’s market capitalization by trillions of dollars and meet ambitious operational goals.
In a letter to shareholders released Friday, Tesla’s board outlined a compensation package that builds on the 2018 CEO Performance Award framework but with significantly higher targets. Under the new plan, Musk would need to create nearly $7.5 trillion in shareholder value to receive the full award - a dramatic increase from the billions required in his previous compensation plan.
The award includes operational milestones focused on reaching Adjusted EBITDA targets up to 28 times higher than the top milestone in the 2018 award. It also requires the deployment of 1 million Robotaxis in commercial operation and the delivery of 1 million AI Bots.
The compensation plan includes "supercharged retention" requirements, mandating that Musk remain at Tesla for at least seven and a half years and up to 10 years to vest in the full award.
In the shareholder letter, board members Robyn Denholm and Kathleen Wilson-Thompson wrote: "Simply put, retaining and incentivizing Elon is fundamental to Tesla achieving these goals and becoming the most valuable company in history."
The board also highlighted Tesla’s recent achievements, including the delivery of its 8 millionth vehicle, deployment of more than 37 GWh of energy storage from Q3 2024 through Q2 2025, and the launch of its first Robotaxis in Austin, Texas in June.
Additionally, the company signed what it described as a "landmark deal" with Samsung in July to facilitate future chip production near its Texas operations.
The letter referenced Musk’s recently unveiled "Master Plan, Part IV," which focuses on creating "Sustainable Abundance" through reimagined approaches to labor, mobility, and energy, with AI integration through products like Full Self-Driving, Optimus, and Robotaxi.
Tesla’s board is also asking shareholders to approve an amendment to the company’s 2019 Equity Incentive Plan that would provide a special share pool to fulfill obligations to Musk under the 2018 CEO Performance Award and replenish the employee incentive pool by 60 million shares.
The company recently relocated its corporate headquarters to Texas from Delaware, a move the board described as beneficial due to Texas’ corporate governance framework that "enables boards to listen to, and act in accordance with, the will of shareholders."