Tesla is asking shareholders to approve another massive compensation package for CEO Elon Musk that would dramatically expand his voting control over the company while also seeking approval to invest in his AI startup xAI. The proposal comes as Musk demands greater influence over Tesla's strategic direction amid his sprawling business empire.
Tesla just dropped a bombshell that could reshape corporate governance in Silicon Valley. The electric vehicle giant is asking shareholders to approve yet another outsized compensation package for CEO Elon Musk—one that would require the company to nearly double its market capitalization to $2 trillion while granting Musk the increased voting control he's publicly demanded.
The timing couldn't be more controversial. According to Friday's SEC filing, the proposed plan consists of 12 tranches of share awards tied to aggressive performance milestones over the next decade. To unlock even the first tranche, Tesla would need to achieve a staggering $2 trillion market cap—nearly double its current valuation—while hitting a production milestone of 20 million cumulative vehicle deliveries.
Tesla shares jumped 3% in pre-market trading as investors digested the ambitious targets. The market reaction suggests confidence in Musk's ability to deliver, despite ongoing questions about his divided attention across multiple ventures. Wall Street analysts are already calling this the most audacious executive compensation proposal in corporate history.
But here's where it gets really interesting: Tesla is simultaneously asking shareholders to approve the company investing in Musk's artificial intelligence startup xAI, which recently merged with his social media platform X. This dual proposal creates an unprecedented conflict of interest scenario that governance experts are already flagging as problematic.
"We've never seen anything quite like this," said Charles Elson, founding director of the Weinberg Center for Corporate Governance at the University of Delaware, speaking to CNBC. "You're essentially asking shareholders to enrich the CEO while also funding his competing business interests."
The compensation structure reflects Musk's calculated response to Delaware court challenges that struck down his previous $56 billion pay package earlier this year. That ruling questioned whether Tesla's board acted independently when negotiating Musk's compensation, given his outsized influence over the company's direction.
