Tesla has unveiled a new compensation plan for its CEO, Elon Musk, which could potentially be valued at approximately $1tn.

It includes a series of performance targets that Musk must achieve to secure the full compensation, such as expanding Tesla’s emerging robotaxi sector and increasing the company’s market capitalisation from around $1.1tn to at least $8.5tn.

According to the details provided in Tesla’s proxy filing, the additional shares Musk could acquire would elevate his ownership in the electric vehicle manufacturer to a minimum of 25%.

The new package offers Musk a significant financial incentive and greater control over the company, following the annulment of his previous compensation agreement valued at more than $50bn by a Delaware court in 2018.

While Tesla is appealing this ruling, the board is exploring alternative compensation methods, including an interim stock award worth approximately $30bn that was granted in early August.

The incentives outlined in the new plan are intended to maintain Musk’s focus on Tesla as it seeks growth in emerging sectors such as robotics and AI.

The filing also included a non-binding proposal for Tesla to invest in Musk’s xAI startup, a concept he has previously mentioned.

Both the compensation plan and the proposals will be subject to a vote by shareholders at the annual meeting scheduled for 6 November 2025.

Musk has been at the helm of Tesla since 2008 and also manages four other companies: SpaceX, xAI, Neuralink, and the Boring Company. He has indicated a desire to remain in charge of Tesla for at least the next five years.

The latest CEO award, valued at $87.8bn in the filing, could escalate to around $1tn if Musk meets all performance criteria and is able to access all restricted shares.

The proxy filing specifies that Musk must engage in the board’s development of a long-term CEO succession plan to qualify for the last two segments of the performance award.

“Simply put, retaining and incentivising Elon is fundamental to Tesla achieving these goals and becoming the most valuable company in history,” stated Tesla in a letter to shareholders, signed by Chair Robyn Denholm and director Kathleen Wilson-Thompson, who were part of a special board committee evaluating CEO compensation.

In the filing, Tesla acknowledged that “Musk’s high public profile attracts significant scrutiny, and that some have questioned whether his personal views or outside activities might be a distraction from his leadership of Tesla.”

As part of the compensation discussions, the board sought assurances that Musk’s political engagements would diminish in a timely manner.

During negotiations, Musk indicated he might leave Tesla to “pursue his other interests” if he did not receive guarantees regarding his voting interest and compensation for his past services.

Under the new agreement, Musk must remain with Tesla as either CEO or an executive officer responsible for product or operations to qualify for the shares, which are divided into 12 segments.

To receive these shares, Musk must achieve 12 market capitalisation milestones alongside 12 operational targets, including the delivery of 1 million Optimus robots and 20 million Tesla vehicles, having one million robotaxis in commercial operation, and increasing adjusted EBITDA to $400bn.