The governing board of electric carmaker Tesla has put forward a pay package for CEO Elon Musk that could make him the world’s first trillionaire, contingent on meeting high-performance standards over the next decade.
The proposal, revealed in the company’s regulatory filings, aims to incentivize Musk to drive Tesla’s growth and innovation.
“This is a ridiculously large pay package. It raises lots of questions,” said Brian Quinn, a professor at Boston College Law School.
Quinn added that he had little doubt about how shareholders would vote, given Tesla’s stock price is largely driven by sentiment rather than actual performance.
“Given that Tesla’s stock price is basically all vibes and appears to have very little to do with the automaker’s actual performance, I suspect they will approve this package.”
To earn the trillion-dollar pay package, Musk must meet ambitious benchmarks, including boosting Tesla’s valuation to $2 trillion in the short term and $8.6 trillion by the end of the 10-year plan.
The company currently has a valuation of approximately $1.03 trillion. Additionally, Tesla would need to deliver 20 million vehicles in total, put a million self-driving robotaxis in operation, and deliver one million artificial intelligence bots.
As part of the plan, Musk would also be required to develop a long-term framework to name a successor as Tesla’s CEO. All of Musk’s compensation would come in the form of Tesla shares, tied to performance metrics, with no salary or cash bonuses.
Musk would need to stay with the company for at least seven and a half years to cash out any shares earned, with the full amount eligible if he stays until 2035.
If approved, the plan would put an additional 12% of Tesla’s shares in Musk’s reach, giving him greater power in shareholder meetings. Currently, Musk holds about 13% of Tesla’s shares. This increased influence could further solidify Musk’s position as a key figure in the company’s decision-making process.
Musk’s close association with US President Donald Trump has sparked controversy and protests. In July 2024, Musk endorsed Trump’s re-election bid and became a close adviser.
However, their relationship soured over Trump’s efforts to pass a massive spending package, leading Musk to launch his own rival political movement, the America Party.¹
The proposed compensation package has sparked debate, with some questioning whether Musk’s leadership is worth the substantial reward.
Tesla’s recent struggles, including a 25% drop in shares this year and plummeting quarterly profits, have raised concerns about the company’s future performance.
Despite these challenges, the Tesla board believes Musk deserves the higher compensation range, stating that traditional packages are not suitable for designing his incentive compensation.