Tesla offers billionaire Elon Musk a trillion-dollar pay package. Here’s the breakdown

Tesla outlined a $1 trillion compensation plan for CEO Elon Musk on Friday, which pays out if he is able to grow the EV company’s market capitalization from about $1.1 trillion to $8.5 trillion and to hit several operational targets.

The award would vest in tranches and the last two quotas require a board‑approved CEO succession plan.

Below are details about the proposal:

Stock-based compensation

Tesla plans to grant Musk up to 423.7 million performance-based restricted shares — about 12% of the company’s current shares — split into 12 equal tranches.

Market value milestones

The plan sets 12 market-capitalization targets, starting at $2 trillion for the first, followed by nine increases of $500 billion each, and finally two $1 trillion milestones, bringing the total to $8.5 trillion.

The market-cap milestones must be “sustained,” meaning Tesla must meet both a 30‑day and a six‑month trailing average market value.

Business goals

Tesla has set 12 operational milestones, including rolling out robotaxis and robots, and raising profits as measured by adjusted EBITDA, or earnings before interest, taxes, depreciation and amortisation.

Four product goals

• 20 million Tesla vehicles delivered, total

• 10 million paid Full Self-Driving (FSD) subscriptions on average over three consecutive months; free trials will not count

• 1 million “Bots” delivered (AI robots like Optimus), counted from the September 3 grant date

• 1 million driverless robotaxis in commercial service on average over three successive months

Earning stock Tranche vs Receiving

After a tranche is earned, Musk is able to vote the awarded shares. The shares vest, which means they are completely in his control and could be sold, either 7.5 or 10 years after September 3, 2025, when the award program starts. Shares earned in the first five years of the program vest at 7.5 years of the program. Those earned in the second five years vest at the 10th year.

Musk must remain Tesla’s CEO or be in another approved executive role at the time of vesting to receive the shares.

Forfeiture rules

Tesla’s plan proposes that if any goals are not met by the end of the 10-year program, the associated awards will be forfeited.

If Musk stops serving in an approved role, all unvested shares are also forfeited, except in certain cases like qualifying terminations or a change in control.