Elon Musk, already the world’s wealthiest individual, could become the first trillionaire. Tesla’s board unveiled a record-setting compensation plan to keep him focused on the company amid growing competition and market challenges.
The plan builds on Musk’s previous package, which many doubted but Tesla exceeded ahead of schedule. The board now aims to incentivize him to achieve even greater growth.
Massive stock rewards tied to ambitious goals
Musk could receive 423.7 million additional Tesla shares, valued at $143.5 billion today. He will only earn them if Tesla reaches an $8.5 trillion market capitalization.
That figure is nearly eight times the current $1.1 trillion valuation. If realized, Musk’s new shares alone could be worth nearly $1 trillion.
Tesla would surpass Nvidia as the world’s most valuable company, even though Toyota sells more cars and earns higher profits.
Proposal for Tesla to invest in xAI
The filing also included a shareholder proposal for Tesla to take a stake in xAI, Musk’s artificial intelligence company. The plan did not disclose size or cost of a potential investment.
XAI recently purchased X, the platform Musk bought in 2022 for $44 billion. Any Tesla stake could increase Musk’s influence while benefiting the company indirectly.
Musk’s fortune and legal hurdles
Musk owns 410 million Tesla shares valued at $139 billion. With stakes in 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 pushing to reinstate them, which could raise Musk’s ownership to 18%.
Tesla shares nearly doubled after the 2024 election but later dropped amid protests, declining sales, and weaker profits. Shares remain 26% below December’s peak.
Betting on robotaxis and humanoid robots
Musk says Tesla’s growth will come from self-driving robotaxis. Owners could rent their cars for autonomous rides, generating additional revenue.
He also promises humanoid robots that could eventually outpace Tesla’s automotive business.
Analysts support the move
“It’s a huge package, but Tesla must retain Musk,” said Wedbush analyst Dan Ives. He emphasized Musk’s critical role in advancing Tesla’s AI and technology initiatives.
The board agreed, calling Musk’s leadership unmatched. The filing noted Musk warned he might pursue other ventures without new incentives.
Tesla is also preparing for succession. Musk must create a CEO transition plan to unlock the final 70 million shares.
Planning for leadership continuity
Tesla confirmed it regularly reviews succession planning for emergencies and long-term needs. It praised its internal talent pipeline while considering external candidates.
Musk receives no salary. His pay comes entirely from stock and options, leaving him unpaid since 2017 due to legal disputes. In contrast, Jeff Bezos and Mark Zuckerberg relied solely on their founding stakes without additional grants.
Musk demands control
Musk insists he hold 25% of Tesla’s voting shares to guide AI and robotics strategy. Without that influence, he may develop 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 hits ambitious targets.
Ambitious targets draw skepticism
If Tesla reaches $8.5 trillion, Musk’s holdings could rise nearly $1 trillion. But he earns nothing until Tesla first reaches $2 trillion and meets milestones like one million robots in operation or $50 billion in adjusted operating income.
Critics cite Musk’s history of overpromising. Since 2014, he has repeatedly said fully autonomous cars were imminent. Analyst Gordon Johnson accused him of inflating Tesla’s stock through bold but unfulfilled claims.
Others warn the package may encourage hype rather than solving core challenges. Chinese rival BYD is poised to surpass Tesla in global EV sales.
Recent US law changes also eliminate Tesla’s regulatory credit revenue, adding pressure to the business.
Johnson dismissed the plan entirely. “Tesla will never hit $8 trillion,” he said.
Tesla shares rose about 5% in early trading after the announcement.
