Elon Musk, already the world’s richest person, could become the first trillionaire. Tesla’s board has proposed a historic compensation package to secure his focus as the company faces rising competition and market pressures.
The plan follows Musk’s previous package, which many doubted but Tesla achieved ahead of schedule. Now the board aims to incentivize him to push the company even further.
Huge stock rewards tied to ambitious goals
Musk could receive 423.7 million additional Tesla shares, worth $143.5 billion at current prices. He will only get them if Tesla reaches an $8.5 trillion market capitalization.
That figure is nearly eight times today’s $1.1 trillion valuation. If achieved, Musk’s new shares alone would be worth nearly $1 trillion.
Tesla would surpass Nvidia as the most valuable company ever, even though Toyota sells more vehicles and earns higher profits.
Proposal to invest in xAI
The filing also suggested Tesla could take a stake in xAI, Musk’s artificial intelligence company. It did not specify how much or at what price.
XAI recently acquired X, the platform Musk purchased in 2022 for $44 billion. Any stake could further expand Musk’s influence and benefit Tesla indirectly.
Musk’s wealth and legal challenges
Musk owns 410 million Tesla shares valued at $139 billion. Combined with stakes in SpaceX, xAI, and other ventures, Bloomberg estimates his wealth at $378 billion.
He also holds disputed options for 304 million shares from a 2018 deal struck down by Delaware courts twice. Tesla is working to reinstate them, which could lift Musk’s stake to 18%.
Tesla stock nearly doubled after the 2024 election but later fell due to protests, weaker sales, and declining profits. Shares remain 26% below December’s peak.
Betting on robotaxis and humanoid robots
Musk says Tesla’s future relies on self-driving robotaxis. Owners could rent their cars for autonomous rides, generating new revenue streams.
He also promises humanoid robots that could eventually exceed Tesla’s automotive sales.
Analysts defend the package
“It’s a massive deal, but Tesla must retain Musk,” said Wedbush analyst Dan Ives. He highlighted Musk’s critical role in Tesla’s AI and technology expansion.
The board agreed, describing Musk’s leadership as unmatched. The filing noted Musk warned he might pursue other ventures without stronger incentives.
Tesla is preparing for succession. Musk must design a CEO transition framework to unlock the final 70 million shares.
Succession planning
The company said it regularly reviews leadership transitions for emergencies and long-term needs. It praised its internal talent pipeline while considering external candidates.
Musk receives no salary. His compensation comes solely from stock and options, leaving him unpaid since 2017 due to legal disputes. By contrast, Jeff Bezos and Mark Zuckerberg relied solely on founding stakes without additional grants.
Musk pushes for control
Musk insists on holding 25% of Tesla’s voting shares to direct AI and robotics strategy. Without that influence, he may focus on projects outside Tesla.
Ross Gerber of Gerber Kawasaki said the package shows Musk fears losing control. He criticized its size but acknowledged it may be justified if Tesla hits its targets.
Lofty targets spark skepticism
If Tesla reaches $8.5 trillion, Musk’s holdings could rise nearly $1 trillion. But he gains nothing until Tesla hits $2 trillion and meets ambitious milestones, such as deploying one million robots or achieving $50 billion in adjusted operating income.
Critics highlight 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 with bold but unfulfilled statements.
Others warn the package may encourage hype over fixing core challenges. Chinese rival BYD is close to surpassing Tesla in global EV sales.
Recent US law changes have also cut Tesla’s regulatory credit revenue, adding pressure to its business.
Johnson dismissed the plan entirely. “Tesla will never hit $8 trillion,” he said.
Tesla shares rose about 5% in early trading following the announcement.
