Elon’s $87 Billion Bet: Tesla’s 2025 CEO Performance Award

When Tesla dropped its latest proxy, one section towered over everything else: Proposal Four — the 2025 CEO Performance Award. It’s a monster of a package. Not in the cushy, golden-parachute sense. In the “Elon only wins if Tesla becomes one of the most valuable companies in history” sense.

But before you roll your eyes at the number — an eye-watering $87.7 billion valuation on paper — let’s cut through the corporate jargon and lay out what this thing actually is, why Tesla thinks it matters, and what it means for shareholders.

What Is the 2025 CEO Performance Award?

It’s essentially Tesla dangling a massive, all-or-nothing stock prize in front of Elon Musk.He won’t see a dime unless Tesla hits nearly impossible goals. The award covers about 423 million shares, or 12% of Tesla’s stock, split into 12 tranches.

Each tranche only becomes his if Tesla clears two hurdles:

1. Market cap targets — Tesla has to climb from $2 trillion all the way to $8.5 trillion by 2035. That’s roughly the combined value of Meta, Microsoft, and Alphabet today.

2. Operational milestones — Think big, bold moonshots:

   • 20 million Teslas delivered

   • 10 million active FSD subscriptions

   • 1 million Optimus bots sold

   • 1 million robotaxis in commercial operation

   • Or hitting staggering profitability goals — up to $400 billion in Adjusted EBITDA

If both the financial and operational milestones are met, Musk earns the right to the shares. But even then, he can’t actually cash in until 7.5–10 years later, provided he’s still serving Tesla.

Why Tesla Says They Need This

Tesla’s board packaged it like this:

• Musk is “uniquely” qualified to lead Tesla through its next phase — a transition from EV pioneer to AI, robotics, and autonomous services powerhouse.

• The 2018 performance award was a hit. It pushed Tesla from ~$50 billion to over $1 trillion in value. They see this as the sequel.

• Musk doesn’t take a salary. He thrives on moonshot incentives. If you want him fully locked in at Tesla, you give him Everest-sized goals to chase.

The underlying bet? That Musk is wired for ambition, not comfort. And if he’s got skin in the game tied directly to impossible milestones, he’ll make the impossible happen.

What Makes This Different From 2018

The 2018 award was built around stock options. Musk had to hit $50B market cap jumps paired with revenue or profit milestones. He did — all 12 tranches vested. Shareholders saw Tesla’s market cap balloon more than 20x.

This time, the award is restricted stock. That means:

• Musk gets voting power earlier, but he doesn’t get the financial upside until the shares vest years later.

• If he leaves Tesla before vesting, even earned tranches vanish.

• He must hold shares for at least five years once vested.

It’s not just about making Tesla bigger. It’s also about keeping Musk in the driver’s seat for another decade.

Why Shareholders Should Care

On one hand, this could be the ultimate alignment of incentives.Musk only wins big if shareholders win bigger — if Tesla becomes worth $8.5 trillion and dominates in EVs, FSD, bots, and robotaxis.

On the other hand, it’s a huge dilution risk. If all 12 tranches vest, Musk’s stake could approach 29% of Tesla. That gives him massive influence over the company’s future direction.

Then there’s the PR angle. Some will see this as yet another “Elon cash grab,” even though it’s structured to be the opposite — 100% performance-based. And let’s be real: if the milestones flop, shareholders eat the dilution without seeing the upside.

The Risks No One Should Ignore

Tesla’s own proxy statement is brutally clear:

• The milestones may never be met. Robotaxis could be delayed (again). FSD adoption may stall. Bots could flop.

• Consumer demand could shift. If the world doesn’t want what Musk is building, Tesla could miss opportunities elsewhere.

• Accounting charges hit early. Tesla will start expensing this award on the books even before milestones are achieved, which could weigh on reported earnings.

• Legal battles loom. The 2018 award got dragged into court. Expect lawsuits here too.

• Dilution is real. Even if milestones fail, just the existence of this package could shape shareholder expectations.

Why This Matters Beyond the Numbers

This award isn’t just about Musk getting richer. He’s already the world’s richest man. It’s about whether Tesla can transform from an automaker into something much bigger — an AI and robotics empire.

The milestones themselves tell the story:

• 20 million EVs would make Tesla the dominant global carmaker.

• 10 million FSD subscriptions could turn autonomy into a recurring-revenue juggernaut.

• 1 million robotaxis? That’s Uber, Lyft, and the taxi industry turned upside down.

• 1 million Optimus bots? That’s redefining labor itself.

This isn’t about the next quarter. It’s about building the most valuable company on the planet.

The Vote

Shareholders will soon decide:

• Yes means approving one of the largest, boldest pay packages in history, with the hope that Musk repeats his 2018 magic.

• No means Tesla risks losing the one person its board believes can deliver on these audacious goals.

There’s no middle ground.

Final Take

The 2025 CEO Performance Award is a bet — not just on Elon Musk, but on Tesla becoming something far bigger than cars. It’s a moonshot, wrapped in legal fine print and tied to trillion-dollar targets.

Love him or hate him, if Musk pulls it off, Tesla shareholders won’t be complaining. And even if the moonshot falls short, the pursuit itself could spark innovations that reshape entire industries.

Sources:

1. Tesla, Inc. “Preliminary Proxy Statement (Form PRE 14A): Proposal Four — Tesla Proposal for Approval of the 2025 CEO Performance Award.” U.S. Securities and Exchange Commission, 5 Sept. 2025, https://www.sec.gov/Archives/edgar/data/1318605/000110465925087598/tm252289-4_pre14a.htm#tPRO4