Elon Musk, the world’s wealthiest individual, may soon hit a milestone never seen before. Tesla’s board announced a massive new pay package for its chief executive. The deal is designed to secure his attention on the carmaker as it faces heavy competition and financial pressures.
The package offers Musk a vast reward in stock if Tesla’s valuation soars far above today’s level. His earlier pay plan drew criticism but Tesla still reached the ambitious goals it required.
Musk’s path to a trillion
The new deal could give Musk 423.7 million Tesla shares. At current prices, that equals $143.5 billion. He would only receive the full amount if Tesla’s value climbs dramatically in the coming years.
Tesla’s market capitalization would need to hit $8.5 trillion for Musk to unlock the entire award. That stands far above today’s $1.1 trillion. At that point, his new shares alone would be worth close to $1 trillion.
Such a valuation would make Tesla the most valuable company in history, doubling Nvidia’s current worth. Tesla already leads automakers in market value, though Toyota produces more cars and profits.
Proposal to link Tesla and xAI
The proxy filing also included a shareholder proposal for Tesla to invest in Musk’s AI company, xAI. The move could tie Tesla more tightly to Musk’s growing tech empire.
XAI recently bought X, the platform Musk acquired in 2022 for $44 billion. Tesla’s board stayed neutral on the proposal and did not reveal the size or cost of any stake.
Any investment would likely add to Musk’s wealth, given his majority control of xAI.
Musk’s empire and immense fortune
Musk currently holds 410 million Tesla shares worth $139 billion. With his stakes in xAI, SpaceX, and other ventures, Bloomberg values his fortune at $378 billion.
He also has options for 304 million additional shares. But a Delaware court struck down the 2018 pay package that granted them. Tesla reintroduced it this year, which would give Musk 18% ownership if approved.
Tesla’s stock nearly doubled between election day and December 2024 as investors bet on Musk’s political connections. But protests, slowing sales, and weaker profits erased those gains. Shares remain 26% below that peak despite a partial rebound.
Betting on robotaxis and robots
Musk argues Tesla will grow far larger. He predicts self-driving robotaxis will bring in huge profits. Owners could even rent out their cars for autonomous rides.
He has also promised humanoid robots that he claims could eventually outsell Tesla’s vehicles.
Defending Musk’s pay
“It’s a huge package but Tesla must keep Musk as CEO,” said Wedbush analyst Dan Ives. He called Musk the key to Tesla’s next growth wave in artificial intelligence.
Tesla’s board backed that view. The proxy revealed Musk warned he might pursue other interests if denied assurances.
The board said Musk’s leadership remains unmatched for Tesla’s mission. Still, it emphasized succession planning. Musk must even create a framework for CEO succession to unlock the last 70 million shares.
Preparing for succession
Tesla said it prepares for both sudden and planned leadership changes. It highlighted a pipeline of internal talent and noted it is also reviewing external candidates.
Musk takes no salary. His earnings come entirely from stock. Due to the legal fight, he has received no compensation since 2017. By contrast, billionaires Jeff Bezos and Mark Zuckerberg built fortunes on their founding stakes without new packages.
Musk pushes for more control
Musk insists he must control at least 25% of Tesla shares. He said he feels uneasy leading Tesla’s AI and robotics projects without that influence. Otherwise, he hinted he may build products outside the company.
Ross Gerber, CEO of Gerber Kawasaki, said the plan reflects Musk’s fear of losing control. “He’s worried about being pushed out,” Gerber explained. He also called the package excessive and driven by greed.
Lofty goals and sharp criticism
Musk’s holdings could gain nearly $1 trillion if Tesla’s value climbs to $8.5 trillion. But he would not receive new shares until Tesla first hits $2 trillion. He must also meet goals such as deploying one million robots or reaching $50 billion in adjusted operating income.
Critics doubt those targets. Musk has promised fully autonomous cars since 2014 but has not delivered. Analyst Gordon Johnson accused him of keeping Tesla’s stock inflated with hype.
Others warn the package prioritizes lofty promises over fixing real problems. Chinese automaker BYD is closing in on Tesla in global sales.
Meanwhile, US regulators scrapped billions in credits that once boosted Tesla’s revenue. Without them, the company must depend more heavily on actual car sales.
Johnson said Tesla will never hit the targets. “Things will get worse, not better,” he warned. “Tesla will never reach $8 trillion.”
Tesla’s shares rose about 5% in early trading after the announcement.
