Tesla (NASDAQ:TSLA) moved 2.1% higher in premarket trading on Friday as investors assessed the $1 trillion pay package for CEO Elon Musk that will be voted on at the shareholder meeting on November 6.
The new incentive-driven pay package for Musk would provide an additional 423 million shares of common stock, or about 12% of the current outstanding shares, which would boost Musk’s ownership of Tesla (NASDAQ:TSLA) to ~25% voting power.
In order for Musk to reach 25% voting power as part of the $1 trillion pay package, a number of operational goals will have to be met. The first of twelve tranches is unlocked after Tesla (TSLA) reaches and maintains a $2 trillion market cap, with each $500 billion in market cap further unlocking the next tranche until finally the company reaches $8.5 trillion in market cap.
Notably, Tesla (TSLA) will also need to deliver 20 million vehicles, achieve 10 million active FSD subscriptions, deliver 1 million Optimus bots, and have 1 million Robotaxis in commercial operation. On the financial front, the company must also hit aggressive adjusted EBITDA goals. Musk must remain CEO or otherwise fully engaged with Tesla (TSLA) for at least the next 7.5 to 10 years to trigger full vesting of all tranches.
Tesla (TSLA) Chairwoman Robyn Denholm said in an interview with CNBC that the pay package plan was designed to keep Musk both motivated and focused on delivering for the company.
Wedbush Securities analyst Dan Ives was positive on the development. “With the groundwork now in place for Musk to accelerate its current path and capitalize on the opportunities ahead, this represents a critical next step to keep Musk as CEO at least until 2030, with Tesla heading into one of the most important stages of its growth cycle with the autonomous and robotics future now on the doorstep,” he highlighted in an analyst note on Friday morning.
Rivian Automotive (RIVN) and Lucid Group (LCID) also poked out small early gains on Friday.