Elon Musk, already the richest man alive, could become history’s first trillionaire. Tesla’s board has proposed a record-breaking pay package designed to keep him focused on the electric carmaker.
The plan ties Musk’s rewards to stock milestones far beyond today’s market realities. His previous deal, once seen as impossible, turned out to be easily achievable for Tesla.
Billion-dollar stock rewards at stake
The proposal grants Musk 423.7 million Tesla shares, valued at $143.5 billion today. But he will only receive them if Tesla’s market value rises to $8.5 trillion.
That figure is nearly eight times its current $1.1 trillion valuation. At such a level, the new shares alone would be worth close to $1 trillion.
If achieved, Tesla would surpass Nvidia and become the world’s most valuable company, despite selling fewer cars and generating less profit than Toyota.
Proposal to link Tesla with xAI
The board’s filing also included a shareholder proposal for Tesla to invest in xAI, Musk’s artificial intelligence firm. The company left open the size and price of any stake.
XAI recently acquired X, the platform Musk bought in 2022 for $44 billion. Any stake could further expand Musk’s already vast business empire.
Musk’s vast fortune and legal hurdles
Musk owns 410 million Tesla shares worth $139 billion. His stakes in SpaceX, xAI, and other firms boost his net worth to $378 billion, according to Bloomberg.
He also holds options for 304 million more shares from a 2018 deal, though courts struck it down. Tesla has tried to reinstate the plan, which could raise his ownership to 18%.
Tesla’s stock nearly doubled after the 2024 election but then dropped amid protests, falling sales, and profit declines. The shares remain 26% below December’s peak despite a partial recovery.
Betting on new technologies
Musk promises Tesla will lead in self-driving technology through a robotaxi network. He claims the fleet could generate huge profits by offering rides and allowing owners to rent their cars.
He also touts humanoid robots as a potential business even bigger than Tesla’s cars.
Analysts defend the deal
“It’s a huge pay package, but Tesla needs Musk,” said Wedbush analyst Dan Ives. He sees Musk as crucial in the artificial intelligence era.
The board’s filing stressed Musk’s unmatched leadership qualities. It revealed Musk suggested he might focus on other ventures without fresh guarantees.
But Tesla is preparing for life after Musk too. He must design a CEO succession plan before receiving the final 70 million shares.
Planning for succession
The board said it reviews leadership transitions regularly, both for emergencies and long-term scenarios. It described Tesla’s internal talent pool as strong while also evaluating outside candidates.
Musk takes no salary and has not received compensation since 2017 because of ongoing legal disputes. Unlike Musk, Jeff Bezos and Mark Zuckerberg relied only on their founding stakes for wealth, without additional stock packages.
Musk demands control
Musk insists he needs 25% control of Tesla’s shares to steer its future in AI and robotics. Without that influence, he warned he may develop technologies outside Tesla.
Investor Ross Gerber argued Musk fears losing control. He called the deal excessive but admitted it could be justified if Tesla hits its targets.
Critics voice doubts
If Tesla’s market cap hits $8.5 trillion, Musk’s current holdings alone would soar nearly $1 trillion in value. But he gains nothing until Tesla hits $2 trillion and meets ambitious milestones, such as deploying a million robots or achieving $50 billion in operating income.
Critics argue Musk has overpromised for years. Since 2014, he has claimed fully autonomous cars were only a year away. Analyst Gordon Johnson accused him of keeping Tesla’s stock inflated through bold but unfulfilled statements.
Others warn the deal could push Tesla toward hype rather than fixing its challenges. Chinese rival BYD is close to surpassing Tesla in global EV sales, while US regulatory credit revenues are disappearing.
Johnson dismissed the plan outright. “Tesla will never hit $8 trillion,” he said.
Tesla shares rose about 5% in early trading after the announcement.
