Tesla Directors Propose $1 Trillion Incentive to Make Musk Focus on Corporation's Affairs

In a move that has sparked controversy, Tesla has introduced a new compensation plan for its CEO, Elon Musk. The plan, which is currently a topic of discussion among investors and financial analysts, could potentially make Musk the first person in history to earn $1 trillion in compensation.

The amended plan, developed by Tesla's Chairwoman of the Board of Directors, Robyn Denholm, is divided into 12 tranches. Musk must hit 12 market capitalization milestones matched with 12 operational milestones to qualify for the payouts.

Musk does not have to be the CEO to qualify for this compensation. He just needs to occupy a senior role responsible for product or operations. One of the requirements is for Musk to participate in the board's development of a framework for someone to succeed him as CEO.

The plan includes a series of ambitious benchmarks Musk must meet. These include expanding Tesla's robotaxi business and growing the company's market value to at least $8.5 trillion. Musk's political ambitions are also a factor in the new pay package, with the board seeking assurances that his involvement with the political sphere would wind down in a timely manner.

The original proposal for Musk's compensation, worth roughly $54 billion, was deemed excessive by a Delaware judge. However, some analysts believe the requirements for Musk, such as boosting Tesla's market cap, would be "a win for all shareholders."

Nancy Tengler, CEO of Laffer Tengler Investments, and Gene Munster, managing partner of Deepwater Asset Management, believe the incentives for Musk align with Tesla's push to grow in artificial intelligence, making xAI a natural partner.

However, not everyone is in agreement. Dan Coatsworth, an investment analyst at AJ Bell in London, questions whether one person could be worth a $1 trillion pay deal and whether the proposal sets a new precedent for excessive remuneration packages.

David Wagner, head of equity and portfolio manager at Aptus Capital Advisors, believes the life blood of Tesla relies on Musk. Yet, the ability of Musk to deliver the performance required by the latest compensation package is uncertain, according to the Zen Master.

The board of directors of Tesla is paid roughly 100 times more than board members at other major corporations. The SEC filing also includes a non-binding shareholder proposal for Tesla to take a stake in Musk's xAI startup.

Tesla shareholders are virtually guaranteed to approve the new compensation plan for Musk in November, as they believe a rising tide raises all boats and they will benefit personally if Musk hits his marks. However, critics argue that the plan is excessive and a symptom of poor corporate governance.

The new compensation plan for Elon Musk at Tesla is a source of controversy, but it remains to be seen whether Musk can meet the ambitious benchmarks set by the plan and whether it will indeed benefit all shareholders.

Tesla Directors Propose $1 Trillion Incentive to Make Musk Focus on Corporation's Affairs