In its Preliminary Proxy Statement for the 2025 Annual Meeting of Shareholders, Tesla’s Board of Directors has unveiled a new, long-term CEO Performance Award for Elon Musk. It’s a super ambitious incentive package designed to retain his leadership and guide the company through its next phase of unprecedented growth, as recently outlined in Master Plan, Part IV.
The proposal, which will be put to a shareholder vote on November 6th, 2025, lays out a series of staggering market capitalization and product milestones that Elon must achieve over the next decade.
The new award is the centerpiece of a comprehensive compensation strategy that also asks shareholders to approve a “Special Share Reserve” to address the disputed 2018 pay package, and a replenishment of the general employee stock pool.
Trillions or Bust: New Performance Goals
Building on the successful framework of the 2018 award, the new 2025 CEO Performance Award puts Elon to task - grow Tesla by trillions of dollars in shareholder value. To receive the full award, the board states that he must create nearly $7.5 trillion in new shareholder value.
The award is broken into 12 parts, each of which can be “earned” by achieving one Market Capitalization Milestone and one Operational Milestone. The scale of these goals is simply ridiculous, but at the same time, so is the immense scale of the pay package.
The Market Capitalization Milestones involve increasing Tesla’s market capitalization to various levels, starting with the first goal of $2 trillion. Tesla’s current market cap stands at $1.1 trillion. Each of the next nine steps requires an additional $500 billion in growth, while the last two require an additional $1 trillion, culminating in a final target market cap of $8.5 trillion.
To put this into perspective, that’s equivalent to the combined market caps of Meta, Microsoft, and Alphabet (Google) today.
The Operational Milestones are a mix of profitability targets and product deployment goals. The four product goals are centered around Tesla’s current and future products, including vehicles and robots. The goals include:
20 million cumulative Tesla vehicles delivered
10 million active FSD subscriptions
1 million Optimus bots delivered
1 million Robotaxis in commercial operation
The other eight profitability milestones range from $50 billion to a staggering $400 billion in trailing four-quarter adjusted EBITDA.
Market Value | Operational Milestones | Estimated Total Value |
|---|---|---|
$2.0 trillion | 20 million vehicles delivered | $22 billion |
$2.5 trillion | 10 million active FSD subscriptions | $55 billion |
$3.0 trillion | 1 million robots delivered | $98 billion |
$3.5 trillion | 1 million Robotaxis in operation | $153 billion |
$4.0 trillion | $50 billion adjusted EBITDA | $219 billion |
$4.5 trillion | $80 billion adjusted EBITDA | $295 billion |
$5.0 trillion | $130 billion adjusted EBITDA | $383 billion |
$5.5 trillion | $210 billion adjusted EBITDA | $481 billion |
$6.0 trillion | $300 billion adjusted EBITDA | $591 billion |
$6.5 trillion | $400 billion adjusted EBITDA | $711 billion |
$7.5 trillion | None | $902 billion |
$8.5 trillion | None | $1.1 trillion |
The estimated value for each milestone is calculated at the market value at that milestone and includes the shares of each previous milestones.
The Award Structure and Pay Out
If shareholders approve the plan, Elon will be granted performance-based restricted stock representing up to 12% of Tesla’s adjusted share count, divided equally among the 12 steps. That’s 1% per step or about 35 million shares per milestone.
While each step awards Musk the same number of shares, the shares in later milestones are worth much more due to the higher market cap. The one trillion dollar number only comes into play if Musk achieves all the milestones and the company is valued at $8.5 trillion. The first milestone alone would only be worth an estimated $22 billion, which is the estimated value of 35 million shares at a $2 trillion market cap.
First Milestone - 20 Million Vehicles Delivered
While the last few milestones seem like stretch goals, the first couple are much more easily achieved. The first milestone is for Tesla to reach a $2 trillion market cap and deliver 20 million vehicles, a goal that has been discussed for years. Tesla recently delivered its 8th million vehicles, and they continue to deliver about 2 million vehicles annually, so they’re well on their way to meet that goal within the next five years.
Second Milestone - 10 Million FSD Subscriptions
The pay package’s second milestone is reaching a market cap of $2.5 trillion and obtaining 10 million active FSD subscriptions. Interestingly, Tesla hasn’t provided the number of active subscriptions it currently has, making it hard to decide how difficult this milestone will be.
However, Tesla has recently shared the purchase rate of FSD, which gives us a rough idea. The question is, does a customer purchasing FSD outright count as a FSD subscription, too? We’re guessing it will, since it can be viewed as a lifetime subscription option.
We’re guessing Tesla is well below 5 million subscriptions currently, maybe at 2-3 million. However, let’s remember that FSD subscriptions are currently only available in the United States and Canada. With the recent launch of FSD in Mexico, Puerto Rico, China, and most recently in Australia and New Zealand, Tesla is expected to receive a boost once subscriptions become available in these markets.
Tesla will soon also add the ability to subscribe to FSD directly from the vehicle ordering page, which should also provide a boost in subscriptions. FSD v14 is also expected to be out this month, and Musk has already stated that he expects it to be the second-largest update ever to the software.
Other Milestones
Honestly, given Tesla’s trajectory, the product milestones don’t seem unachievable here. The market cap is likely the hardest to achieve. However, keep in mind that these milestones are over a 10-year period.
Tesla is planning to put the robotaxi into production in 2026, so producing 1 million of these vehicles over 10 years shouldn’t be a challenge. However, Tesla can’t produce these vehicles and keep them standing still. The hard work will come in creating a truly autonomous Robotaxi network that can scale without safety monitors. Let's remember that Tesla has also stated that they’ll sell Cybercabs to anyone who wants to buy them, and they’ll be priced under $30,000.
The most challenging product goal here is achieving one million Robotaxis in operation. Uber currently has about eight million drivers globally, and there are an estimated 200,000-400,000 city-run taxi vehicles in the United States.
While we think of Robotaxis as the Cybercab or the currently used Model Y, Tesla is also planning to allow users to use their own vehicles in the Robotaxi network, so these could potentially be counted as well. This goal ultimately relies on Tesla achieving Unsupervised FSD, at least in major markets.
Keeping Elon Long Term & Succession Plan
Unlike the 2018 options-based award, this new package uses restricted stock, a structure that better aligns with Elon’s stated desire for voting influence and provides a reason for him to be retained by Tesla. Even after a milestone is met and a step is earned, Elon must generally remain in a leadership role for a vesting period of at least 7.5 years, and up to ten years, to fully vest in the economic benefits of the shares.
The final two steps add an interesting requirement. Elon must participate in developing a CEO succession framework to be approved by the board in the future.
Addressing the Past; Securing the Future
Alongside the new performance award, the proxy statement also asks shareholders to approve an amended equity incentive plan with two other key components.
First, a “Special Share Reserve” of ~208 million shares. This reserve provides the board with the flexibility to fulfill the 2018 CEO Performance Award without requiring further shareholder votes. Second, the proposal asks to replenish the general employee incentive pool by ~60 million shares. This is crucial for Tesla to continue attracting and retaining employees in a time of increasing talent competition, particularly in the fields of AI and robotics.
Taken together, the three proposals are a comprehensive and audacious plan for compensation, not just for Elon, but also for Tesla’s employees and continued growth.
