Elon Musk, the world’s wealthiest person, could become the first trillionaire. Tesla’s board has introduced a historic compensation package to keep him focused on the company amid growing competition and market challenges.
The plan mirrors Musk’s previous package, which many once doubted but Tesla achieved ahead of schedule. Now, the board aims to incentivize him to push the company even further.
Massive stock rewards on the line
The deal could give Musk 423.7 million Tesla shares, valued at $143.5 billion today. He will receive them only if Tesla reaches an $8.5 trillion market capitalization.
That figure is nearly eight times the current $1.1 trillion. If achieved, Musk’s new shares would be worth nearly $1 trillion alone.
Tesla would become the most valuable company ever, surpassing Nvidia, even though Toyota sells more cars and earns higher profits.
Tesla could invest in Musk’s xAI
The proxy filing also proposed that Tesla take a stake in xAI, Musk’s artificial intelligence company. The plan did not specify the size or price of a potential investment.
XAI recently purchased X, the social media platform Musk acquired in 2022 for $44 billion. Any stake could further expand Musk’s empire and enrich Tesla indirectly.
Musk’s wealth and legal hurdles
Musk owns 410 million Tesla shares worth $139 billion. His holdings in SpaceX, xAI, and other ventures push his net worth to $378 billion, according to Bloomberg.
He also holds disputed options for 304 million 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 stock nearly doubled after the 2024 election but lost gains after protests, weaker sales, and declining profits. Shares remain 26% below their December peak.
Betting on robotaxis and humanoid robots
Musk predicts Tesla’s future will rely on self-driving robotaxis. Owners could rent out their vehicles for autonomous rides, generating additional revenue.
He also promises humanoid robots that could eventually surpass Tesla’s automotive sales.
Analysts defend the package
“It’s a massive deal, 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 echoed that view, calling Musk’s leadership unmatched. The filing revealed Musk suggested he might pursue other ventures without stronger incentives.
Tesla is also planning for succession. Musk must prepare a CEO transition framework to unlock the final 70 million shares.
Succession planning
Tesla confirmed it regularly reviews leadership transitions for both emergencies and long-term needs. It praised its internal talent pipeline while also considering external candidates.
Musk receives no salary. His pay comes solely from stock and options, leaving him unpaid since 2017 due to court disputes. In contrast, Jeff Bezos and Mark Zuckerberg relied only on their founding stakes without additional grants.
Musk seeks greater control
Musk insists he must hold 25% of Tesla’s voting shares to guide the company’s AI and robotics strategy. Without that control, he hinted he may develop technologies outside Tesla.
Ross Gerber of Gerber Kawasaki said the package reflects Musk’s fear of losing influence. He criticized its size but admitted it could be justified if Tesla meets ambitious targets.
Lofty targets spark skepticism
If Tesla hits $8.5 trillion, Musk’s holdings could increase nearly $1 trillion. But he gains nothing until Tesla first reaches $2 trillion and meets tough milestones, such as deploying one million robots or achieving $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 accused him of inflating Tesla’s stock with bold but unfulfilled statements.
Others warn the package may push Tesla toward hype rather than solving core challenges. Chinese rival BYD is close to surpassing Tesla in global EV sales.
New US laws have also cut Tesla’s regulatory credit revenue, creating additional pressure.
Johnson dismissed the plan outright. “Tesla will never hit $8 trillion,” he said.
Tesla shares rose about 5% in early trading after the announcement.
