Elon Musk, already the wealthiest person on the planet, could become the first trillionaire. The Tesla board unveiled a massive new pay package for its chief executive. It aims to keep his focus on the troubled electric carmaker.
The package would reward him with additional Tesla shares if the company grows far beyond today’s valuation. Musk’s previous deal added greatly to his wealth and came with ambitious goals. Tesla reached those goals despite doubts at the time.
Musk’s potential trillion-dollar reward
The new plan could grant Musk 423.7 million Tesla shares. At today’s stock value, those shares equal $143.5 billion. But he would only receive them if Tesla’s stock rises sharply in coming years.
Tesla’s market capitalization would need to reach $8.5 trillion for Musk to get all the shares. That is far above the current $1.1 trillion valuation. If the company hits that target, those shares alone would approach $1 trillion in value.
Such growth would make Tesla the most valuable company ever. It would be worth double Nvidia’s current market capitalization. Tesla already leads the auto industry in market value, though rivals like Toyota sell more cars and earn larger profits.
A proposal to link Tesla and xAI
The proxy statement also included a shareholder proposal that Tesla take a stake in Musk’s AI company, xAI. Such an investment could expand Musk’s influence and Tesla’s future prospects.
XAI recently purchased X, the social media platform Musk bought in 2022 for $44 billion. The proxy statement did not take a position for or against the proposal. It also gave no details on the size of any stake or price.
Since Musk owns most of xAI, any such deal could enrich him further.
Musk’s existing empire and wealth
Musk currently owns 410 million Tesla shares, worth $139 billion at Thursday’s close. Combined with his stakes in xAI, SpaceX, and other ventures, Bloomberg values his fortune at $378 billion.
He also has options for 304 million more Tesla shares. But a Delaware judge struck down his 2018 pay package that granted those options. The court ruled it illegal, despite shareholders approving it twice. Tesla tried again this year to reissue those options, which would give Musk 18% ownership.
Tesla shares nearly doubled between election day and mid-December 2024, as investors bet on Musk’s ties to Donald Trump. But protests, falling sales, and reduced profits caused those gains to vanish. The stock has recovered slightly but remains 26% below the December peak.
Betting on robotaxis and humanoid robots
Musk insists Tesla can still grow far larger. He predicts robotaxis and self-driving cars will generate enormous profits. Tesla owners could even rent out their cars for driverless rides.
He has also promised humanoid robots that he says could surpass car sales.
Analysts defend the massive pay package
“It’s a big pay package but Tesla must keep Musk as CEO,” said Wedbush analyst Dan Ives. He argued Musk will drive Tesla’s next wave of growth in the age of artificial intelligence.
The proxy statement stressed that Tesla must keep Musk focused. He remains active in politics and announced plans for a third political party. Negotiations revealed that Musk raised the possibility of pursuing other ventures if he did not get assurances.
The board argued Musk has unique leadership qualities necessary to transform Tesla. Yet it also highlighted succession planning. Musk must even create a framework for CEO succession to unlock the final 70 million shares.
Tesla’s succession debate
The board said management succession remains a priority for both sudden and long-term events. It praised its pipeline of internal leaders and confirmed it is also evaluating outside talent.
Musk does not receive a salary. His compensation comes from shares and options. Because of the court fight, he has not received any pay since 2017. By contrast, other billionaires like Jeff Bezos and Mark Zuckerberg built fortunes from their original stakes without new stock grants.
Musk demands more control
Musk insists he needs at least 25% control of Tesla shares. In a post, he wrote that he is uncomfortable building Tesla’s AI and robotics future without that influence. If denied, he said he might develop products outside Tesla.
Ross Gerber, CEO of Gerber Kawasaki, believes the pay package reflects Musk’s fear of losing control. “This is all about Musk worrying about being pushed out of Tesla,” he said. Gerber questioned the size of the package and called it a display of greed.
Tesla’s ambitious but uncertain future
Musk’s current holdings could be worth nearly $1 trillion more if Tesla’s valuation hits $8.5 trillion. But he would not get any new shares until the company reaches $2 trillion in market capitalization. He must also meet operational goals, such as deploying one million robots or boosting adjusted operating income to $50 billion.
Critics doubt those promises. They point to Musk’s repeated but unmet claims of fully autonomous cars. Analyst Gordon Johnson accused Musk of manipulating investors with bold promises. He argued Tesla’s stock is inflated by hype rather than results.
Gerber and others warn the package encourages chasing lofty targets instead of fixing Tesla’s core problems. The company faces pressure from Chinese rivals such as BYD, which may soon lead in global EV sales.
At the same time, new US rules eliminate billions in revenue Tesla once earned by selling regulatory credits. Without those payments, Tesla must rely even more on actual sales growth.
Johnson predicts Tesla’s stock will not meet the board’s goals. “Things are going to get worse, not better,” he said. “Tesla will never reach $8 trillion.”
Shares rose about 5% in early trading after the pay package announcement.
