He’s already the richest man in the world but the Tesla board of directors has proposed a new $1 trillion pay package that would put CEO Elon Musk’s wealth nearly on a par with the market capitalization of some of the world’s most exclusive companies. Headlight.News has more.
Already the richest man in the world, Musk could add another $1 trillion to his personal fortune.
The Tesla board of directors has been nothing short of lavish when it comes to pay – CEO pay, that is. And while the planned $50 billion payout the board approved in 2018 was blocked in court, it handed out a $30 billion interim stock award last month worth an estimated $30 billion.
Now, in a bid to convince the South African-born entrepreneur to stay with the company well into the future, Tesla directors have proposed a new compensation package that could be worth an unprecedented $1 trillion should the company’s CEO deliver on a series of targets.
“Simply put, retaining and incentivizing Elon is fundamental to Tesla achieving these goals and becoming the most valuable company in history,” Tesla said in a shareholder letter jointly signed by Chairman Robyn Denholm and director Kathleen Wilson-Thompson, a member of a special board committee charged with determining CEO compensation.
What’s the deal
Tesla Chair Robyn Denholm wants to make sure Musk — and his AI and robot technologies — stay with Tesla.
The proposal put together by the Tesla board comes at a time when it’s become unclear how long the 54-year-old Musk might be willing to remain in command of the Texas-based company. He spent much of his time during the first months of 2025 running DOGE, the Trump administration’s Department of Government Efficiency – though, after leaving Washington, D.C. in May, he told the Bloomberg news service his plan to stay with Tesla for at least five more years.
The package being dangled in front of Musk lays out a series of what the Bloomberg has described as “ambitious benchmarks he must meet to earn the full payout.”
At the bare minimum, it was valued at $87.8 billion, according to paperwork filed with the federal government. But it could mushroom to $1 trillion by adding restricted shares for meeting a series of targets. Among other things, Tesla would need to grow the robotaxi business it officially launched in June, while also building up new lines of business, including sales of its humanoid Optimus robot.
Big target, big payoff
Key to meeting the expectations laid out in the compensation plan, Musk would have to oversee the growth of Tesla’s market value to a minimum $8.5 trillion. Tesla’s stock price – and thus its market capitalization – has fluctuated wildly this year. But with the share price running around $348 on Friday morning, Tesla is valued by investors at just over $1.1 trillion – meaning Musk’s pay package could be nearly equivalent to what Wall Street says the entire company is worth today.
The proposal initially appeared to excite Wall Street, Tesla stock surging on the opening bell, but that high soon wore off, with shares falling sharply. It remains to be seen how the market will react as analysts and investors have a chance to fully digest what the company’s board is offering Musk.
There’s also the prospect that the proposal could find itself the target of a lawsuit, much as earlier pay packages were. A judge in Delaware, where Tesla previously was registered, blocked those payouts. Last December, Chancellor Kathaleen McCormick of the Court of Chancery ruled there were “fatal flaws” in a $50 billion compensation package, despite a favorable vote by shareholders. In an earlier ruling she cited, among other things, the overly close relationship between Musk and key members of the Tesla board of directors.
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Ultimatums
Musk has never hidden his sense that he is worth much more than he’s currently paid. And he has warned Tesla’s board – and investors – that he could leave the automaker or, at a minimum, take some of his most promising projects elsewhere. These include both robotics and artificial intelligence.
Earlier this week, as part of a new corporate master plan, Musk estimated the company could wind up seeing 80% of its value based on the Optimus robot which, he previously suggested, could find widespread use in homes, as well as in business applications.
“We are building the products and services that bring AI into the physical world,” Tesla said on X, Musk’s social network this week. “We have been working tirelessly for nearly two decades to create the foundation for this technological renaissance through the development of electric vehicles, energy products and humanoid robots.”
What about EVs?
The new master plan Musk this month released is both shorter, at about 1,000 words, and less detailed than prior plans. But one thing seems clear: the battery-electric vehicles that were the original reason for Tesla’s existence are expected to become a less significant part of the company going forward, except in the form of robotaxis.
That’s probably no surprise considering sales have been on a downslope for more than a year. Global registrations were off 6% during the second quarter and new reports show a continuing slump in Europe. Germany’s Federal Motor Transport Authority this week reported registrations fell 39% in that country last month – and are now off 56% for the year. With rare exception, Tesla’s numbers are down by double digits in other key European markets. In turn, earnings have been hard hit, as well, tumbling 16% for the second quarter.
A variety of factors take at least some of the blame, including increased competition at a time when the EV market’s growth has faltered. But there’s also Musk himself, the CEO becoming a lightning rod for opposition to the policies of the Trump administration and his own actions at DOGE. That hasn’t played well with the typically more liberal EV buyers, leading to global protests and even vandalism at a number of Tesla dealerships.
A very different Tesla
“He’s done tremendous damage” to Tesla’s EV business, said Anthony Johndrow, CEO of Reputation Economy Advisors. “But that’s not relevant to the desired future valuation” of Tesla, he sees the board declaring with its proposed pay package.
As Musk himself has been saying in recent months, EVs are becoming secondary to Tesla’s long-term business and its market capitalization. In particular, Johndrow believes the board wants to become, first and foremost “an AI company,” while robotaxis and robots will become other lines of business continuing to not only generate strong revenues but the sort of high-tech operations Wall Street rewards with huge earnings multiples.
While Tesla stock is down 16% so far this year, Bloomberg noted, its multiple recently topped 200 times earnings for the first time, a rarified valuation typically reserved for tech companies like Apple, Microsoft and NVIDIA.
Whether such prospects will win investor support is uncertain, though stockholders solidly approved the pay package now going through the appeals process in Delaware.
And Tesla has taken several steps to minimize opposition to future payouts. For one thing, it left shareholder-friendly Delaware, moving its corporate registration to business-friendly Texas. The board also revised corporate bylaws in May and only those investors with stakes above 3% of Tesla shares are permitted to file lawsuits. That move itself could, however, face a legal challenge.
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