The proposal, which will be put to a shareholder vote, would grant Musk up to 423.7 million additional shares over the next decade.

The full payout is contingent on Tesla achieving a series of ambitious milestones. Musk will only receive all the shares if the company’s market value swells to $8.5tn (c. £6.3tn) – more than eight times its current valuation and double the record for any company in history. The first tranche of shares would be released when Tesla reaches a $2tn (c. £1.5tn) valuation.

In its shareholder filing, the board argued that the historic remuneration is necessary to retain Musk, whom they believe “singularly possesses the leadership characteristics necessary to transform Tesla”. They noted that during negotiations, Musk suggested he might “pursue other interests” without such assurances, a concern heightened by his focus on other ventures like SpaceX, xAI, and the social media platform X.

The proposal also addresses Musk’s public demand for greater influence. In January 2024, he stated he was “uncomfortable” growing Tesla as a leader in AI and robotics without approximately 25% voting control, up from his current 13%. This package is seen by analysts as a direct response, ensuring his attention remains on Tesla, CNN reports.

The plan has divided observers. Supporters, like Gene Munster of Deepwater Asset Management, believe it correctly incentivises Musk to focus on delivering the future of AI, robotaxis, and humanoid robots, which could justify the colossal valuation. They argue shareholders have little to lose, as they will only pay out if the value of their own holdings soars.

However, critics call the plan “absurd”. Analyst Gordon Johnson labelled Musk a “master manipulator” skilled at elevating the stock with promises – such as fully autonomous cars “next year” since 2014 – that have yet to materialise.

Despite the controversy, the package is expected to pass. Tesla shareholders have a history of backing Musk’s pay, even re-approving a previous package in 2024 after it was voided by a Delaware court. For many investors, the logic is simple: if Musk reaches these targets, their own immense profits will make his trillion-dollar reward a price worth paying.