Elon Musk, already the world’s richest individual, could become the first trillionaire. Tesla’s board has introduced a historic pay package designed to keep him focused as the company faces rising competition and market pressures.
The plan builds on Musk’s previous package, which many doubted but Tesla exceeded ahead of schedule. Now the board hopes to push him toward even greater growth.
Huge stock rewards tied to bold targets
The proposal could give Musk 423.7 million additional Tesla shares, worth $143.5 billion today. He will receive them only if Tesla reaches an $8.5 trillion market capitalization.
That amount is nearly eight times Tesla’s current $1.1 trillion valuation. If achieved, Musk’s new shares alone would be worth close to $1 trillion.
Tesla would surpass Nvidia as the world’s most valuable company, even though Toyota sells more cars and earns higher profits.
Tesla could invest in xAI
The proxy filing included a shareholder proposal for Tesla to take a stake in xAI, Musk’s artificial intelligence company. The plan did not specify the size or cost of the investment.
XAI recently purchased X, the social media platform Musk acquired in 2022 for $44 billion. Any Tesla stake could further increase Musk’s influence while benefiting the company indirectly.
Musk’s wealth and legal battles
Musk owns 410 million Tesla shares valued at $139 billion. Combined with SpaceX, xAI, and other ventures, Bloomberg estimates his net worth at $378 billion.
He also holds options for 304 million more shares from a 2018 package, twice struck down by Delaware courts. Tesla is trying to reinstate them, which could raise Musk’s stake to 18%.
Tesla shares nearly doubled after the 2024 election but later dropped due to protests, weaker sales, and declining profits. Shares remain 26% below their December peak.
Betting on robotaxis and humanoid robots
Musk predicts Tesla’s growth will come from self-driving robotaxis. Owners could rent their cars for autonomous rides, creating new revenue streams.
He also promises humanoid robots that could eventually surpass Tesla’s automotive business.
Analysts defend the pay plan
“It’s a massive package, but Tesla must retain Musk,” said Wedbush analyst Dan Ives. He emphasized Musk’s role in advancing Tesla’s AI and technology initiatives.
The board agreed, calling Musk’s leadership unmatched. The filing revealed Musk warned he might pursue other ventures without new assurances.
Tesla is also preparing for succession. Musk must develop a CEO transition framework to unlock the final 70 million shares.
Preparing for leadership continuity
Tesla confirmed it regularly reviews succession planning for emergencies and long-term needs. It praised its internal talent pipeline while also considering external candidates.
Musk receives no salary. His compensation comes entirely from stock and options, leaving him unpaid since 2017 due to legal disputes. By contrast, Jeff Bezos and Mark Zuckerberg relied solely on their founding stakes without additional grants.
Musk insists on control
Musk says he must hold 25% of Tesla’s voting shares to guide AI and robotics strategy. Without that level of influence, he may pursue projects outside Tesla.
Investor Ross Gerber said the package reflects Musk’s fear of losing control. He criticized its size but admitted it could be justified if Tesla meets ambitious goals.
Lofty targets invite skepticism
If Tesla hits $8.5 trillion, Musk’s holdings could rise nearly $1 trillion. But he earns nothing until Tesla first reaches $2 trillion and achieves targets such as deploying one million robots or generating $50 billion in adjusted operating income.
Critics point to Musk’s history of overpromising. Since 2014, he has repeatedly claimed fully autonomous cars were imminent. Analyst Gordon Johnson said Musk inflated Tesla’s stock with bold but unfulfilled claims.
Others warn the package could encourage hype rather than solving Tesla’s core challenges. Chinese rival BYD is close to surpassing Tesla in global EV sales.
New US rules have also removed Tesla’s regulatory credit revenue, adding further pressure.
Johnson dismissed the plan outright. “Tesla will never hit $8 trillion,” he said.
Tesla shares rose about 5% in early trading following the announcement.
