If Elon Musk can elevate Tesla’s shareholder value to over $8 trillion within the next decade, he may become the world’s first trillionaire.
This is contingent upon shareholders endorsing a revised compensation plan for the company’s “superstar CEO,” as one judge once referred to him. The annual general meeting is set to take place Thursday afternoon in Austin, Texas.
“If Mr. Elon fulfills all performance benchmarks under this principles-based 2025 CEO Performance Award, his leadership will position Tesla as the most valuable company in history,” states the Company Annual Proxy Statement. I take pride in that.
The forward-looking aspect of Mr. Musk’s $1 trillion compensation isn’t the sole matter on the agenda. Shareholders will also evaluate alternatives for compensating Musk the estimated $56 billion still owed from his 2018 compensation plan. Moreover, the company urges shareholders to reject several other proposals, including one advocating for child labor audits. Previous compensation packages have been invalidated twice by Delaware courts, with an appeal pending in the state Supreme Court, and the company aims to ensure Musk is compensated regardless of the ruling.
The road to $1 trillion
The 2025 package encompasses goals beyond merely increasing the company’s market capitalization.
The defined milestones are split into 12 “tranches,” each presenting its own unique objective. The initial milestone, or tranche, necessitates achieving a market capitalization of $2 trillion. The following nine require an additional $500 billion growth, culminating in $8.5 trillion by 2035. Every financial milestone is supplemented by product development prerequisites.
To secure an additional 12% equity stake in the company over the next decade, Musk must also deliver 20 million Tesla electric vehicles, obtain 10 million active fully autonomous driving subscriptions, launch 1 million humanoid robots, and introduce 1 million robotaxis into commercial use. Additionally, he is expected to elevate the company’s profits to $400 billion for four consecutive quarters. Actual revenue for Q3 2025 was $4.2 billion, reflecting a 9% year-over-year decline.
Ultimately, Musk must increase Tesla’s market capitalization from around $1 trillion to $8.5 trillion by 2035. He must also invest in the company for at least seven-and-a-half years and contribute to developing a long-term succession plan. As he amplifies his company’s value, the value of his shares—and his wealth—will consequently rise.
The company noted in its proposal that achieving these milestones “will be extremely difficult and challenging for both Tesla and Musk personally.” Realizing these financial targets would position Tesla to be valued similarly to the combined worth of Meta, Microsoft, and Google’s parent company, Alphabet.
Some believe Mr. Musk is capable of achieving this. He continues making billions, even if he falls short of all the milestones.
Courting a “superstar CEO”
Tesla board chairman Robin Denholm issued a public warning recently, stating that a “no” vote on the 2025 compensation plan could jeopardize Musk’s position as CEO.
In a memo to shareholders, Denholm and board member Kathleen Wilson Thompson acknowledged that Musk “has not received meaningful compensation in eight years,” owing to a legal dispute regarding a prior compensation plan from 2018. They emphasized that Musk’s achievements during the earlier agreement elevated Tesla’s market capitalization to $735 billion.
Should Musk secure a new compensation plan alongside his 2018 package, he would ultimately control over 25% of Tesla shares. As of November 5, Tesla stock was trading around $450 per share, close to its 52-week high.
The flow of votes
On November 4th, SEC filings revealed that social media posts by Musk and others influenced some to follow the guidance of advisory group Glass Lewis. Schwab Investment Fund plans to oppose the $1 trillion compensation package.
However, the situation changed rapidly.
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“We firmly believe that backing this proposal aligns management and shareholder interests for the best outcomes for everyone involved,” stated Schwab. The investment firm emphasized it does not solely depend on Glass Lewis or ISS recommendations.
Simultaneously, Norges Bank Investment Management, Norway’s sovereign wealth fund and Tesla’s seventh largest shareholder, declared its intention to vote against the proposed salary package.
“In line with our stance on executive compensation, we are concerned about total compensation, dilution, and insufficient risk mitigation for key personnel,” stated Norges.
In addition to support from current board members and a surge of messages on Musk’s own social media platform X, other stakeholders have also voiced support for the proposal, with at least three additional investment firms already committed to backing it.
Musk, as Tesla’s largest individual shareholder with over 500 million shares, can technically vote in favor of his own pay structure.
“If controlling shareholders could endorse their own compensation, it would undermine a sense of accountability,” remarked Lawrence Hammermesh, a professor emeritus at Widener University Delaware School of Law and a former corporate lawyer.
Tesla’s new headquarters
Tesla has consistently offered its CEO an incentive-based compensation plan, stipulating specific milestones for stock options.
Nevertheless, the last compensation package established in 2018 faced a legal challenge from a shareholder with less than 12 shares during the lawsuit in Delaware Chancellor’s Court. He prevailed, invalidating and canceling the salary package.
In response, Musk criticized the court and requested Tesla to relocate its headquarters from Delaware to Texas. Musk’s public dissatisfaction with the Delaware ruling is believed to have expedited #DExit, a movement where other major companies, including Dropbox and Meta, contemplate moving their corporate headquarters out of Delaware.
“Elon Musk wields significant influence, which extends into corporate law,” commented Eric Talley, Professor, Columbia University Law School. Delaware’s reputation as a “corporate mecca” remains relatively intact “until 2024, when Elon Musk endeavored to rally support,” he added.
Source: www.theguardian.com
