Tesla is proposing a huge new pay package for Elon Musk that could be worth nearly $1 trillion over the next decade — if the company reaches some very ambitious goals.

The board of directors sent a letter to shareholders on Friday asking them to approve the proposal.

The plan would reward Mr. Musk with company shares in 12 tranches as it reaches audacious milestones. To receive all 12 tranches, Mr. Musk would have to grow Telsa’s value to $8.5 trillion from its current $1 trillion.

Mr. Musk’s holdings in the company at that point would be worth close to $1 trillion, according to analysts. The entrepreneur is already considered to be the world’s richest man with assets valued at more than $400 billion.

Tesla’s chairwoman, Robyn Denholm, acknowledges that the deal is “ambitious” but says it is structured to incentivize Mr. Musk.

“Growth that may seem impossible today can be unlocked with new ideas, better technology and greater innovation,” her letter, which is co-signed by a fellow board member, Kathleen Wilson-Thompson, says.

“We believe that Elon’s singular vision is vital to navigating this critical inflection point,” the letter continues. “We also recognize the formidable nature of this undertaking and as a result, the importance of having a leader who is not only willing and capable but eager to meet this challenge.”

Shareholders are being told that retaining and incentivizing Mr. Musk is fundamental to Tesla’s future and its goal of becoming the most valuable company in history.

“Approve a new 2025 CEO Performance Award that uniquely challenges Elon to guide Tesla through a new phase of unprecedented growth by rewarding him — only if he delivers (once again) extraordinary financial returns for you, the shareholders,” the letter states.

That “once again” refers to a pay package that was set up for Mr. Musk in 2018 that called for him to grow Tesla by billions of dollars. When that plan was introduced the goals were thought to be unreachable, but Mr. Musk hit all of the milestones and the company is now worth about $1 trillion.

The first milestone would require Telsa to nearly double its current market capitalization to $2 trillion. Other milestones include delivering a million robots and putting a million robotaxis into commercial operation.

That 2018 pay package is still being litigated. A Delaware court rescinded an equity grant after a shareholder lawsuit. That pay package received shareholder approval but a judge found that Tesla had not fully informed shareholders about the equity grant.

The Delaware supreme court is scheduled to hear arguments in that case on October 29, according to a court calendar updated last month.

The state’s general assembly has amended a law to avoid a similar court battle in the future but the law does not apply retroactively so Mr. Musk’s case was not affected, the City Journal reported.

The new pay package does not require Mr. Musk to dedicate a specific amount of his time to Tesla. Mr. Musk divides his time among several companies, including his artificial intelligence company, xAI, which merged with his social network company, X, earlier this year. He also runs rocket company SpaceX and health company Neuralink.