Elon Musk, the richest person alive, may soon achieve a milestone no one has reached. Tesla’s board unveiled a historic pay deal for its chief executive. The move seeks to secure his focus on the company while it battles serious challenges.
The package offers Musk a massive stock reward if Tesla’s valuation climbs far above current levels. His last deal drew skepticism but Tesla achieved the bold targets it required.
A trillion within reach
The new plan could hand Musk 423.7 million Tesla shares. At today’s stock price, they equal $143.5 billion. He would receive them only if Tesla’s stock value surges in the coming years.
Tesla must hit $8.5 trillion in market capitalization for Musk to claim the full award. That figure towers above today’s $1.1 trillion. At that point, his shares would approach $1 trillion in value.
Such a feat would make Tesla the most valuable company ever, roughly double Nvidia’s worth. Tesla already leads global automakers in valuation, though Toyota sells more cars and earns bigger profits.
Linking Tesla with Musk’s AI empire
The proxy filing also revealed a proposal for Tesla to buy a stake in Musk’s AI company, xAI. Such an investment could tie Tesla more closely to Musk’s expanding empire.
XAI recently purchased X, the social media platform Musk acquired for $44 billion in 2022. The proxy stayed neutral on the idea and gave no details on stake size or cost.
Because Musk controls xAI, any Tesla investment would likely boost his wealth even further.
Musk’s holdings and immense fortune
Musk owns 410 million Tesla shares worth $139 billion. Combined with stakes in xAI, SpaceX, and other ventures, Bloomberg estimates his wealth at $378 billion.
He also holds options for 304 million Tesla shares. A Delaware judge, however, struck down the 2018 package that granted them, calling it illegal. Tesla reintroduced the plan this year, which would give Musk 18% ownership.
Tesla’s shares nearly doubled between election day and December 2024, fueled by hopes tied to Trump. But protests, weaker sales, and sliding profits erased the rally. Shares remain 26% below the peak despite partial recovery.
Robotaxis and humanoid robots as growth engines
Musk insists Tesla can grow much bigger. He predicts robotaxis and self-driving cars will generate massive profits. Tesla owners could even rent out their cars for driverless rides.
He has also promised humanoid robots that he claims could one day surpass Tesla’s car sales.
Supporters defend the deal
“It’s a huge package but Tesla must keep Musk in charge,” said Wedbush analyst Dan Ives. He argued Musk will guide Tesla’s next phase of growth in the AI era.
Tesla’s board stressed the same point. The proxy revealed Musk even suggested he might pursue other ventures if he lacked assurances.
The board said Musk has unique leadership qualities to transform Tesla. But it also underscored succession planning. To unlock the final 70 million shares, Musk must prepare a CEO succession framework.
Preparing for life after Musk
The company said it is readying plans for sudden or long-term leadership shifts. It praised its internal pipeline and confirmed it is also looking at outside talent.
Musk does not receive a salary. His income comes from Tesla shares and options. Due to the legal dispute, he has had no pay since 2017. By contrast, Jeff Bezos and Mark Zuckerberg relied solely on their founding stakes without new grants.
Musk demands more influence
Musk insists he must control at least 25% of Tesla’s shares. He said he feels uneasy driving AI and robotics projects without that level of influence. Otherwise, he hinted at developing products outside Tesla.
Ross Gerber, CEO of Gerber Kawasaki, argued the package shows Musk’s fear of being sidelined. “He’s worried about losing control,” Gerber said. He also called the deal a display of greed.
Lofty targets, rising doubts
Musk’s holdings could gain nearly $1 trillion if Tesla’s valuation climbs to $8.5 trillion. But he will not receive any new shares until Tesla first doubles to $2 trillion. He must also hit milestones such as deploying one million robots or reaching $50 billion in adjusted operating income.
Critics doubt those goals. Musk has promised fully autonomous cars since 2014 but failed to deliver. Analyst Gordon Johnson accused him of inflating Tesla’s stock with hype.
Others warn the package pushes grand promises instead of fixing core problems. Chinese rival BYD is on track to overtake Tesla in global EV sales.
At the same time, US regulators scrapped billions in credits that once boosted Tesla’s revenue. Without them, Tesla must rely more heavily on vehicle sales.
Johnson dismissed Tesla’s chances. “Things will get worse, not better,” he said. “Tesla will never reach $8 trillion.”
Tesla shares rose about 5% in early trading after news of the package.
