The proposed package, which would be the largest in corporate history if approved, underscores Tesla's bet on Musk to steer its transformation from a carmaker into a technology powerhouse.
Overview of Elon Musk's 2025 CEO Performance Award
The 2025 CEO Performance Award is a proposed performance-based restricted stock award for Elon Musk at Tesla, designed to incentivize long-term growth and retain him in a leadership role.
It is structured as an equity grant contingent on achieving ambitious performance milestones, building on the framework of prior awards like the 2018 CEO Performance Award but with significantly higher targets reflecting Tesla's evolved ambitions.
The package does not involve a fixed "1 trillion" value but is tied to massive market capitalization growth (up to nearly $7.5 trillion in additional value) and operational achievements, potentially leading to substantial equity if fully realized.
It includes retention mechanisms requiring Musk to stay in a leadership position for at least 7.5 years, with full vesting possible over 10 years.
The Board (with Musk and his brother recused) recommends shareholder approval at the 2025 Annual Meeting on November 6, 2025.
This proposal follows an interim award granted in August 2025 amid ongoing litigation over the 2018 award, and it incorporates incentives for Musk to help develop a CEO succession plan while minimizing stock volatility.
Key Elements of the Compensation Package
Equity-Based Structure: The award consists of restricted stock units (RSUs) or similar equity instruments, vesting only upon meeting performance criteria.
No base salary, cash bonuses, or other fixed compensation is mentioned; it's purely performance-driven.
Retention Features: Musk must remain in a senior leadership role (e.g., CEO or equivalent) for a minimum of 7.5 years post-approval, with vesting extending up to 10 years.
This is described as "supercharged" retention to ensure long-term commitment.
Succession and Governance Protections: Includes provisions for Musk to collaborate on a long-term CEO succession framework and structural safeguards to reduce potential stock price impacts from award administration or vesting.
Approval Process: Developed over seven months by a special committee evaluating various structures; unanimous Board recommendation for shareholder vote as Proposal Four.
Goals
The primary goals are to drive Tesla into a "new phase of unprecedented growth" by focusing on:
Massive scaling of market capitalization and financial performance.
Innovation and rollout of transformative products like autonomous vehicles and AI robotics.
Alignment with shareholder interests through trillion-dollar value creation, emphasizing sustainability in achievements (e.g., sustained Adjusted EBITDA).
Long-term leadership stability and preparation for future transitions.
Compared to the 2018 award (which targeted billion-dollar growth), this package requires trillion-dollar expansions, making it far more aspirational.
Milestones and Performance Metrics
The award vests in tranches based on a combination of market capitalization, financial, and product/operational milestones.
Full realization requires Tesla to achieve a market cap of at least $8.5 trillion and annual Adjusted EBITDA of $400 billion, representing growth of nearly $7.5 trillion from current levels.
Milestones are structured progressively, similar to the 2018 award's 12 tranches but customized for 2025 ambitions.
Vesting requires simultaneous achievement of these metrics (e.g., market cap + EBITDA + product rollout), with no partial credit for isolated successes.
This ensures holistic growth across financial, operational, and innovative dimensions.
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