Should Tesla Shareholders Approve Musk's $1.28 Trillion Performance Plan?

When Tesla's board first disclosed on Sept 5 details of an unprecedented US$1 trillion (S$1.28 trillion) performance plan to motivate chief executive Elon Musk, investors rushed in, driving the electric vehicle (EV) maker's shares up by as high as 3.6 per cent that day.

- Kang Wan Chern

Trading in the stock jumped sharply and options activity spiked 37 per cent, showing that investors were not just buying shares but also actively betting on future price moves, data from trading platform Moomoo Singapore showed.

Tesla is one of the most heavily traded US stocks by retail investors in the Asia-Pacific, including Singapore.

The company outlined a highly performance-based compensation award for Mr Musk. Under the 2025 CEO performance award, he will be granted 423.7 million new Tesla shares—about 12 per cent of the company—across 12 tranches, each tied to ambitious market capitalization and operational milestones.

The market capitalization targets begin at a US$2 trillion valuation and rise in increments to a staggering US$8.5 trillion over 10 years, compared with Tesla's current market value of US$1.1 trillion.

The operational goals include delivering 20 million vehicles, achieving 10 million active full self-driving subscriptions, deploying one million humanoid robots and putting one million robotaxis into service.

In addition, milestones raising Tesla's adjusted cash profit from US$50 billion to US$400 billion over multiple periods are also included.

If he succeeds in meeting all the targets, Mr Musk, already the best-paid CEO in the world, would receive a US$1 trillion pay package, the largest in history, and end up holding as much as 25 per cent of Tesla.

All Tesla's shareholders within and outside the US as at the close of Sept 15 will be able to vote on this package at an annual meeting on Nov 6. Here's what to consider before voting.

WHY WAS THE 2025 CEO PERFORMANCE AWARD PROPOSED?

Primarily, it was proposed in response to feedback from shareholders who want to retain Mr Musk so that he can focus on growing Tesla, according to a letter to shareholders on Sept 6 by a special committee appointed by Tesla's board to design the award.