This article summarizes Tesla’s 2025 CEO Performance Award structure for Elon Musk, focusing on (1) tranche mechanics, (2) operational milestones, and (3) market-cap targets mapped to implied share prices. It’s designed as a practical reference for investors and researchers.
Quick Take: The award is split into 12 tranches. Each tranche typically requires two “keys” to unlock: (1) a Market Cap milestone and (2) an Operational milestone. When both are met, the tranche is earned; vesting then follows time and service conditions.
1) Award Overview
- Total opportunity: up to ~12% of common shares via performance-based RSUs (PS-RSUs).
- Performance period: 10 years.
- Structure: 12 tranches; each tranche pairs a Market Cap milestone with an Operational milestone.
- Service requirement: Continued leadership role (e.g., CEO or equivalent executive capacity).
- Measurement: Market Cap milestones are assessed using sustained averages (e.g., 30-day and 6-month), not single-day spikes.
2) Market Cap Milestones & Implied Share Prices
The table below converts each Market Cap target into an implied per-share price using a baseline diluted share count of 3.225 billion. A sensitivity range is shown for 3.30 B and 3.50 B shares to account for potential dilution over the performance period.
| Tranche | Market Cap Target | Implied Price (3.225B) | Sensitivity (3.30B) | Sensitivity (3.50B) |
|---|---|---|---|---|
| 1 | $2.0T | $620.07 | $606.06 | $571.43 |
| 2 | $2.5T | $775.09 | $757.58 | $714.29 |
| 3 | $3.0T | $930.10 | $909.09 | $857.14 |
| 4 | $3.5T | $1,085.12 | $1,060.61 | $1,000.00 |
| 5 | $4.0T | $1,240.14 | $1,212.12 | $1,142.86 |
| 6 | $4.5T | $1,395.15 | $1,363.64 | $1,285.71 |
| 7 | $5.0T | $1,550.17 | $1,515.15 | $1,428.57 |
| 8 | $5.5T | $1,705.19 | $1,666.67 | $1,571.43 |
| 9 | $6.0T | $1,860.21 | $1,818.18 | $1,714.29 |
| 10 | $6.5T | $2,015.22 | $1,969.70 | $1,857.14 |
| 11 | $7.5T | $2,325.26 | $2,272.73 | $2,142.86 |
| 12 | $8.5T | $2,635.29 | $2,575.76 | $2,428.57 |
Formula: Implied Share Price ≈ Market Cap Target ÷ Diluted Shares Outstanding. These are mechanical conversions for reference only; actual plan testing uses sustained average market caps and includes timing/vesting conditions.
3) Operational Milestones (Examples & Buckets)
Each tranche requires one Market Cap milestone plus one Operational milestone. While public materials describe the categories and levels, Tesla has emphasized a pairing framework rather than publishing a strict one-to-one mapping in tabular form. The core buckets include:
- Adjusted EBITDA milestones: step-ups such as ~$50B → $80B → $130B → $210B → $300B → $400B
- Vehicles & autonomy: cumulative deliveries (e.g., up to ~20 million), commercial driverless robotaxis (e.g., ~1 million units), and active paid FSD subscriptions (e.g., ~10 million).
- Robotics (Optimus): cumulative production/deployment targets (e.g., ~1 million units).
- Governance & continuity: later tranches include leadership succession and organizational durability requirements.
How to read this: Think of each tranche as a “door.” To open it, Tesla must hit the corresponding Market Cap level and achieve one of the defined Operational milestones. Earning a tranche and vesting the shares are separate steps.
4) Notes, Assumptions, and Caveats
- Share count baseline: 3.225B used for implied prices; sensitivity adds 3.30B and 3.50B to reflect dilution scenarios.
- Sustained averages: Market Cap tests typically require 30-day and 6-month averages at or above the thresholds, not intraday peaks.
- Pairing logic: Public documents emphasize the dual-milestone design (Market Cap + Operational). Some granular tranche-to-metric pairings may be summarized descriptively rather than specified line-by-line.
- Legal/process status: Final terms/interpretations remain subject to shareholder approvals and applicable legal outcomes.
TL;DR
12 tranches. Each requires a Market Cap step (from $2T up to $8.5T) and an Operational win (financial, autonomy/robotaxi, robotics, or subscription scale). The table above converts those Market Cap steps into simple implied share prices for quick benchmarking.