A record-breaking reward scheme
Tesla’s board of directors has moved to suggest a new compensation package for CEO Elon Musk that would be worth as much as $1 trillion. If ratified, it would be the largest-ever compensation package granted to a company executive in history.
The scheme would reward Musk with as much as 12% of Tesla’s stock if the company achieves really huge targets within the next 10 years. Currently, Tesla is worth approximately $1.1 trillion, but it would have to expand to around $8.5 trillion in market value to unlock this agreement.
What Musk owns currently
Elon Musk is already the richest person in the world and already owns about 13% of stock in Tesla. If this deal comes through, then the extra stock he might acquire would only add to his wealth.
However, the new stock would be restricted stock grants, and that would imply that Musk would not be able to sell them as he wishes. He would have to wait until Tesla fulfills its objectives.
Why Tesla wants the deal
Tesla’s board asserts that Musk is the future of the firm. In a letter to shareholders, Tesla chair Robyn Denholm wrote:
“Maintaining and inspiring Elon is crucial for Tesla to thrive and become the most valuable company in history.”
The board believes Musk’s vision has already boosted Tesla’s value over 20 times since 2018, but argues that he has not received “meaningful compensation” since he completed his last pay scheme in 2012.
The gigantic targets up ahead
Musk’s new payment isn’t just tied to Tesla’s market value but also other ambitious goals:
- Deliver 20 million vehicles by 2035 (Tesla delivered 1.8 million in 2023).
- Deploy 1 million robotaxis into operation.
Achieve $400 billion in adjusted EBITDA (a principal measure of profit). To put that in perspective, Tesla recorded $16.6 billion in 2024.
These goals are very ambitious and will be challenging to accomplish, but if Tesla achieves them, Musk’s reward would be enormous.
Recent pay deals
This is not Musk’s first big payday. Tesla gave him another $29 billion compensation package last month to remain the CEO. The company is shifting focus away from its electric car troubles to ambitious projects like robotaxis and human-like robots.
Shares of Tesla soared Friday morning following news of the new trillion-dollar compensation package.
Final thoughts
This would be the biggest pay package in history for any executive if it is approved. It shows how much Tesla’s board values the leadership of Elon Musk and wants him to stay with the company.
In the meantime, the deal highlights the enormous risks and enormous ambitions that come with steering Tesla. For Musk to earn the full amount, Tesla would have to grow much larger than it currently is and achieve goals most consider to be virtually unattainable.
In the meantime, investors will be watching closely to see if Tesla can reach such milestones—and if Musk might someday collect a $1 trillion payout.#
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