Tesla is rallying ahead of a shareholder vote on Elon Musk's compensation

  • Tesla's stock was up 2.5% ahead of a shareholder vote on Elon Musk's compensation package.
  • Tesla's board filed a proxy statement outlining a "compensation performance award" that would grant Musk $2.6 billion in stock options if the company hits key milestones in 10 years.
  • The shareholder meeting will happen on March 21 at 12 p.m. ET.
  • Watch Tesla's stock price move in real time.

Shares of Tesla were rallying, up 2.5%, ahead of a shareholder vote on chairman and CEO Elon Musk's compensation package.

The pay package would better align Musk's interests with the company as it would grant him $2.6 billion in stock options based on performance targets. The "compensation performance award" would give Musk options with 12 potential vesting tranches if the company hits performance targets on both a top- and bottom-line basis over 10 years, according to the SEC proxy filing.

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Elon Musk through the years
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Elon Musk through the years
Elon Musk, founder, CEO and lead designer at SpaceX and co-founder of Tesla, speaks at the International Space Station Research and Development Conference in Washington, U.S., July 19, 2017. REUTERS/Aaron P. Bernstein
Elon Musk, founder, CEO and lead designer at SpaceX and co-founder of Tesla, speaks at the International Space Station Research and Development Conference in Washington, U.S., July 19, 2017. REUTERS/Aaron P. Bernstein
Tesla Motors CEO Elon Musk takes the stage to speak at the National Governors Association Summer Meeting in Providence, Rhode Island, U.S., July 15, 2017. REUTERS/Brian Snyder
FILE PHOTO: Tesla Chief Executive, Elon Musk enters the lobby of Trump Tower in Manhattan, New York, U.S., January 6, 2017. REUTERS/Shannon Stapleton/File Photo
Elon Musk, Chairman of SolarCity and CEO of Tesla Motors, speaks at SolarCity's Inside Energy Summit in Manhattan, New York October 2, 2015. SolarCity on Friday said it had built a solar panel that is the most efficient in the industry at transforming sunlight into electricity. REUTERS/Rashid Umar Abbasi
Tesla Motors Inc CEO Elon Musk unveils a new all-wheel-drive version of the Model S car in Hawthorne, California October 9, 2014. Tesla Motors Inc on Thursday took its first step toward automated driving, unveiling features that will allow its electric sedan to park itself and sense dangerous situations. The company also said it will roll out an all-wheel drive option of the Model S sedan that can go from zero to 60 miles per hour in 3.2 seconds yet doesn't compromise the vehicle's efficiency. Musk said "D" stands for "dual motor," meaning Tesla's all-wheel drive vehicle will have a motor at either end of the chassis to increase control. REUTERS/Lucy Nicholson (UNITED STATES - Tags: TRANSPORT SCIENCE TECHNOLOGY BUSINESS HEADSHOT)
Tesla Motors Inc CEO Elon Musk unveils a new all-wheel-drive version of the Model S car in Hawthorne, California October 9, 2014. Tesla Motors Inc on Thursday took its first step toward automated driving, unveiling features that will allow its electric sedan to park itself and sense dangerous situations. The company also said it will roll out an all-wheel drive option of the Model S sedan that can go from zero to 60 miles per hour in 3.2 seconds yet doesn't compromise the vehicle's efficiency. Musk said "D" stands for "dual motor," meaning Tesla's all-wheel drive vehicle will have a motor at either end of the chassis to increase control. REUTERS/Lucy Nicholson (UNITED STATES - Tags: TRANSPORT SCIENCE TECHNOLOGY BUSINESS HEADSHOT)
Tesla Motors Inc Chief Executive Elon Musk speaks during a news conference in Tokyo September 8, 2014. Musk said on Monday that he would not be surprised if there was a significant deal with Toyota Motor Corp in the next two to three years, though there were no definitive plans. REUTERS/Toru Hanai (JAPAN - Tags: BUSINESS TRANSPORT)
Elon Musk, CEO of Tesla Motors, waves during a news conference to mark the company's delivery of the first batch of electric cars to Chinese customers in Beijing April 22, 2014. REUTERS/Stringer (CHINA - Tags: TRANSPORT BUSINESS) CHINA OUT. NO COMMERCIAL OR EDITORIAL SALES IN CHINA
CEO & CTO of SpaceX and CEO & Chief Product Architect of Tesla Motors Elon Musk receives The President's Award for Exploration and Technology at the 110th Explorers Club Annual Dinner at the Waldorf Astoria in New York March 15, 2014. The club, which promotes the scientific exploration of land, sea, air and space featured catering for the event by chef and exotic creator Gene Rurka. Chef Rurka prepared a variety of dishes featuring an array of insects, wildlife, animal body parts and invasive species. REUTERS/Andrew Kelly (UNITED STATES - Tags: SOCIETY BUSINESS SCIENCE TECHNOLOGY FOOD)
Tesla Motors CEO Elon Musk talks at the Automotive World News Congress at the Renaissance Center in Detroit, Michigan, January 13, 2015. REUTERS/Rebecca Cook (UNITED STATES - Tags: TRANSPORT BUSINESS)
SpaceX CEO Elon Musk speaks after unveiling the Dragon V2 spacecraft in Hawthorne, California May 29, 2014. Space Exploration Technologies, or SpaceX, on Thursday unveiled an upgraded passenger version of the Dragon cargo ship NASA buys for resupply runs to the International Space Station. REUTERS/Mario Anzuoni (UNITED STATES - Tags: POLITICS TRANSPORT SCIENCE TECHNOLOGY SOCIETY)
Tesla Motors CEO Elon Musk poses at the premiere of the documentary "Revenge of the Electric Car" in Los Angeles October 21, 2011. REUTERS/Mario Anzuoni (UNITED STATES - Tags: ENTERTAINMENT TRANSPORT BUSINESS PORTRAIT)
Elon Musk, Chief Executive of Tesla Motors and SpaceX, attends the Reuters Global Technology Summit in San Francisco June 18, 2013. REUTERS/Stephen Lam (UNITED STATES - Tags: BUSINESS SCIENCE TECHNOLOGY TRANSPORT)
Tesla Chief Executive Officer Elon Musk leaves a press event at his company's factory in Fremont, California, June 22, 2012. Tesla began delivering its Model S electric sedan to customers on June 22. REUTERS/Noah Berger (UNITED STATES - Tags: TRANSPORT SCIENCE TECHNOLOGY BUSINESS)
SpaceX founder Elon Musk pauses at a press conference following the first launch of a SpaceX Falcon Heavy rocket at the Kennedy Space Center in Cape Canaveral, Florida, U.S., February 6, 2018. REUTERS/Joe Skipper
SpaceX founder Elon Musk listens at a press conference following the first launch of a SpaceX Falcon Heavy rocket at the Kennedy Space Center in Cape Canaveral, Florida, U.S., February 6, 2018. REUTERS/Joe Skipper
Tesla Motors CEO Elon Musk waves as he leaves the stage after speaking at the National Governors Association Summer Meeting in Providence, Rhode Island, U.S., July 15, 2017. REUTERS/Brian Snyder
89th Academy Awards - Oscars Vanity Fair Party - Beverly Hills, California, U.S. - 26/02/17 ? Elon Musk. REUTERS/Danny Moloshok
Tesla Motors CEO Elon Musk speaks during the National Governors Association Summer Meeting in Providence, Rhode Island, U.S., July 15, 2017. REUTERS/Brian Snyder
Elon Musk, founder, CEO and lead designer at SpaceX and co-founder of Tesla, arrives at the SpaceX Hyperloop Pod Competition II in Hawthorne, California, U.S., August 27, 2017. REUTERS/Mike Blake
Tesla Chief Executive Elon Musk attends a forum on startups in Hong Kong, China January 26, 2016. REUTERS/Bobby Yip
Tesla CEO Elon Musk speaks about new Autopilot features during a Tesla event in Palo Alto, California October 14, 2015. REUTERS/Beck Diefenbach
Tesla founder Elon Musk arrives for the the annual Allen and Co. media conference Sun Valley, Idaho July 7, 2015. REUTERS/Mike Blake
AUSTIN, TX - MARCH 11: Elon Musk speaks onstage at Elon Musk Answers Your Questions! during SXSW at ACL Live on March 11, 2018 in Austin, Texas. (Photo by Chris Saucedo/Getty Images for SXSW)
AUSTIN, TX - MARCH 11: Elon Musk speaks onstage at Elon Musk Answers Your Questions! during SXSW at ACL Live on March 11, 2018 in Austin, Texas. (Photo by Diego Donamaria/Getty Images for SXSW)
AUSTIN, TEXAS - MARCH 10: Elon Musk speaks on stage during the Westworld Featured Session during SXSW at Austin Convention Center on March 10, 2018 in Austin, Texas. (Photo by FilmMagic/FilmMagic for HBO)
AUSTIN, TX - MARCH 10: Elon Musk, CEO of SpaceX speaks onstage during SXSW at Austin Convention Center on March 10, 2018 in Austin, Texas. (Photo by Amy E. Price/Getty Images for SXSW)
BERLIN, GERMANY - NOVEMBER 08: Elon Musk attends the 'Goldenes Lenkrad' Award at Axel Springer Haus on November 8, 2016 in Berlin, Germany. (Photo by Tristar Media/WireImage)
Tesla Motors CEO Elon Musk speaks at a press conference during the 67th International Astronautical Congress in Guadalajara, Mexico on September 27, 2016. / AFP / HECTOR GUERRERO (Photo credit should read HECTOR GUERRERO/AFP/Getty Images)
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Musk will not receive any salary, cash bonuses, or equity that vests "simply by the passage of time," Tesla's board said in the filing.

Musk and his brother, Kimbal, both members of the board, have recused themselves from the vote.

"If all of these milestones were to be achieved, Tesla will have meaningfully achieved its mission of transitioning the world to sustainable energy and will have become one of the most valuable and successful companies in the world," the board stated in the filing. 

The vote comes amid a slump in Tesla's stock performance. Its shares have fallen 18.5% since hitting an all-time high in September.

Many industry watchers have cast doubts on the company's ability to move past its production bottlenecks, largely precipitated by lag times in producing battery modules for its electrical vehicles. 

Tesla's stock was down 0.63% this year.

Read more about why one analyst thinks Tesla will miss its targets this quarter.

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