Tesla(US:TSLA) Feng Huang Wang·2025-10-09 12:55Core Viewpoint - Tesla's CEO Elon Musk has been granted a record-breaking compensation package potentially worth $1 trillion, which may allow him to earn hundreds of billions even if he fails to meet most performance targets [1][2]. Group 1: Compensation Structure - The compensation plan requires Musk to achieve ambitious performance goals akin to "Mars exploration" to earn $878 billion in Tesla stock over ten years [1]. - Analysts suggest that Musk could still earn over $50 billion by meeting only a few relatively easy targets, even if they do not fundamentally change Tesla's products or business [2]. - Achieving just two of the easiest goals, combined with moderate stock growth, could yield Musk $26 billion, surpassing the lifetime compensation of several other top CEOs [2]. Group 2: Performance Targets - Experts indicate that Musk's automotive sales targets are particularly achievable, with a goal of selling an average of 1.2 million cars annually over the next decade, which is 500,000 less than Tesla's projected sales for 2024 [3]. - The board's proposal requires Musk to serve as CEO for at least seven and a half years to receive any stock incentives, but he would gain voting rights immediately upon receiving shares [3]. - The performance targets related to product development are vaguely defined, potentially allowing Musk to receive substantial compensation without significant profit increases [3][4]. Group 3: Market and Profitability Goals - The most challenging targets for Musk are likely related to profitability, with the board setting EBITDA targets between $50 billion and $400 billion, while Tesla's projected profit for 2024 is only $16.6 billion [7]. - The structure of Musk's compensation allows him to earn significant rewards even without meeting profit targets, as achieving sales and market value goals can yield the same stock rewards as hitting profit milestones [7]. - The board's market value targets may be easier to achieve than profit goals, with a modest annual stock price increase of 6.4% sufficient to reach a market value of $2 trillion in ten years, which is below historical averages for major indices [7][8]. Group 4: Ambiguity in Goals - Some performance goals, such as achieving 10 million subscriptions for Tesla's Full Self-Driving (FSD) software, are criticized for lacking clear industry definitions, making them easier to meet [4][5]. - The target of deploying 1 million autonomous taxis without human drivers may also be interpreted loosely, allowing for remote control or human presence in the vehicle [5]. - The goal of producing 1 million robots is similarly vague, as it does not specify a humanoid design, allowing for broad interpretations of what constitutes a "robot" [5][6].