“ Yes, you read this correctly ”: Tesla Pay Committee Pitles 1 Billion Pact to keep Elon Musk as CEO for long term

Tesla told shareholders in the file with the Securities and Exchange Commission that the last Musk’s remuneration package worth $ 29 billion was accompanied by the declaration that “the work was underway” by the special committee evaluating Musk’s remuneration. The Board of Directors – With Elon and his brother, Kimbal, recying from the process – recommended a “longer -term CEO remuneration strategy” which could reach 1 dollars.

The special committee then confirmed this FortuneAmanda Gerut reported: that the $ 29 billion package was not directly linked to performance, and that it was completely the opposite. “Yes, you have read that properly,” the committee told shareholders. “In 2018, Elon had to cultivate Tesla by billions; In 2025, he had to increase Tesla by billions – to be correct, he must create nearly 7.5 billions of dollars of value for shareholders to receive the full price. ” The Committee also said that this price “defies” musk to guide Tesla through an unprecedented new growth phase, while keeping it leadership for many years to come.

Past of Musc Payment

Elon Musk’s relationship with remuneration packages has always been weird by the measures of conventional companies. Unlike wages and heavy cash bonuses that structure most CEO contracts, Musk has repeatedly linked his fortune to Tesla’s ability to break aggressive milestones.

In 2012, the board of directors of Tesla offered him an agreement based on production and obstacles to prices. At the time, he looked daring; Tesla was still a niche manufacturer producing a few tens of thousands of cars. When these objectives were finally achieved, the package delivered tens of millions of dollars in options – at once a victory for him and a justification for the shareholders of Tesla who had seen their stock multiply.

Then came 2018: a plan with a potential jackpot of $ 56 billion on a series of operational measures and stratospheric evaluation objectives. The skeptics mocked themselves, but Musk achieved many of these objectives, pushing Tesla in front of the billion dollar assessment threshold in 2021. For admirers, he proved that the Musk’s visionary campaign. For criticism, it was governance that had gone wrong – a board of directors at its CEO.

Indeed, in January 2024, a Delaware judge canceled this arrangement of $ 56 billion, citing conflicts of interest on the board of directors (including his brother, Kimbal) and the lack of adequate surveillance. The decision landed as a symbolic reprimand of Musk’s balance on Tesla, and a warning concerning the excess of the cult ethics of Silicon Valley. A second attempt to revise the package – “Plan B”, as it was informally called – was again canceled by a Delaware judge almost a year later. Throughout the year, a furious musk decamped with its incorporation into the Delaware.

In the proxy of Friday, the committee declared that it had explored many alternatives, but finally decided to rely on the controversial package of 2018. The new Musk objectives include adjusted Ebitda objectives (up to 28 times more than the 2018 milestone, according to the Committee) and new deployments of products, including 1 million robotaxis in commercial operation and delivery of 1 million IA robots.

Hinged, loyalty and musk dilemma

Tesla’s board of directors found himself trapped in a difficult situation: musk is simultaneously the biggest asset of Tesla and its greatest risk. The extraordinary increase in the company of a car manufacturer with global energy force and sustainable transport has been fueled by its relentless ambition and its strange capacity to attract capital. He embodies the Tesla brand so completely that investors and customers confuse the company’s trajectory with his.

But this strength comes with fragility. The long list of musk of parallel companies – SpaceX, X, Neralink, the criticisms of XAI recently launched – to invoice that Tesla risks becoming a neglected child. Meanwhile, his Mercurial style and his public controversies, from social media storms to clashes with regulators, brought volatility to the stock and reputation of Tesla.

Underlying the billions of dollars is a quieter and more existential question: can Tesla really exceed musk? For more than a decade, it is his vision, his appetite for risks and his impetuous style that has defined the company. However, most of the business giants end up ripening beyond their founding personalities, moving to power towards institutional structures and professional management.

Once again, Tesla’s board of directors has taken the side of continuity, betting that the advantage of locking musk prevails over the turbulence of pushing it aside. However, Tesla’s attraction has always rested in its improbable chances. A company rejected in its stammerings now shapes the future of world transportation. A CEO once thought that reckless has become one of the richest living men. And a pay package once unimaginable is back into play – only now, the number is no longer billions, but a Billion.

For this story, Fortune Used a generative AI to help an initial project. An editor checked the accuracy of the information before the publication.

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