Elon Musk's Goals: The Future of Tesla!

Tesla CEO Elon Musk thanked investors for approving a compensation package that could be worth nearly 1 trillion dollars. However, the challenging part now begins; what needs to be done to unlock this substantial payment is being questioned.

Before the approval of this new plan, Musk held a 13% stake in Tesla following shares sales he made over the past few years. The compensation package announced at the beginning of September for this year will offer Musk 12 major stock option tranches depending on targets deemed ambitious by the board. The total value of these 12 tranches corresponds to approximately 424 million shares, which means Musk could potentially hold up to 25% of Tesla.

Each tranche will be awarded based on both an operational target and a market capitalization threshold. Operational targets include achievements such as Tesla delivering its 20 millionth vehicle, enabling 1 million robotaxis, or selling 1 million Optimus robots. Tesla's EBITDA must eventually reach 400 billion dollars; last year, Tesla reported a total profit of 16.6 billion dollars.

Each target has a required market value threshold; the first target requires reaching a market value of 2 trillion dollars, which is not far from Tesla's current 1.5 trillion dollars valuation. Ultimately, for Musk to receive his entire reward, Tesla would need to achieve a market value of 8.5 trillion dollars while accomplishing all operational goals.

Tesla claims that Musk cannot sell the shares he acquires; this means that Musk will not be able to sell the stocks for at least 7.5 years in the future. However, Musk will have voting rights as soon as he acquires the shares.

Compensation experts argue that Tesla could offer a special class of shares with enhanced voting rights without imposing a significant financial burden to ensure Musk's desired control, whereas Musk has stated that Tesla was established without such a special class, making such an option impossible.

While the targets and market value thresholds seem quite ambitious, there are speculations that Musk might have a backup plan for acquiring new shares. Independent consulting firm Glass Lewis pointed out that management has broad discretion when it comes to distributing some of the shares.

Nevertheless, Wall Street analysts like Dan Ives from Wedbush believe that Tesla is making progress towards surpassing the market value thresholds. Ives predicted on Thursday that Tesla could reach a 2 trillion dollar market value by the beginning of 2026 and could reach 3 trillion dollars by the end of 2026 with the transition to full-scale autonomous and robotic production.