09:11 AM EDT, 09/05/2025 (MT Newswires) -- Tesla's (TSLA) proposal to give Chief Executive Officer Elon Musk a new incentive package of up to $1 trillion is seen as a "smart move by the board as the biggest asset for Tesla is Musk," Wedbush said in a note Friday.

The company's board members asked shareholders to approve a long-term package to retain Musk, under which he will be paid only if he hits "extraordinary financial returns," the note said.

The new compensation package incentivizes Musk to "reach an even higher bar across multiple aspects of the business," including new financial milestones and the rollout of new products such as robotaxis and delivery robots.

The new pay package would provide Musk an additional 423 million shares of common stock, which would boost his stake in the company to around 25% voting power, which Wedbush sees as "critical to keep Musk at the helm."

Wedbush maintained its outperform rating and $500 price target on Tesla.

Shares of Tesla were up 2.4% in recent premarket activity.