Will Tesla Make Elon Musk the First Trillionaire CEO?
What do you offer the world’s richest man? It’s a question any business would struggle with, let alone one with as ambitious growth targets as Tesla.
The world of CEO and leadership compensation is tricky at the best of times – huge pay packages, signals of power, priority and cultural values and, ideally, a line in the sand about how companies view risk, talent and success.
It’s why, when it comes to setting KPIs for Elon Musk – whose enormous wealth, influence spans industries from EVs and AI to space exploration – Tesla has gone big. Really big.
The company has proposed a US$1tn compensation package that, if approved, would be the largest corporate pay award in history.
The huge offer, which is close to Tesla’s current market valuation, follows the company’s recent ‘Master Plan IV’ announcement – a sweeping high-level strategy for creating a ‘Sustainable Abundance’ for all.
The plan positions Tesla as a pioneer in reimagining labour with humanoid robots, transforming mobility and delivering more sustainable energy.
Compensation package details
To receive the mammoth payout, Musk must meet a list of ambitious targets over the next decade.
This includes boosting the company’s valuation nearly eightfold, or around US$7.5bn, selling another 12 million Tesla cars and hitting other targets related to AI, robotaxis and the company’s humanoid robots – a product that Musk has previously said may eventually account for 80% of Tesla’s value.
Under the plan, Musk will receive no salary or cash bonuses. Instead, all compensation will be related to performance and awarded as shares in 12 tranches, tied to 12 market milestones.
The first is to reach a market capitalisation of US$2tn; the following nine tranches require an additional US$500bn in market capitalisation; the last two each require an additional US$1tn.
If Musk fails to double Tesla’s valuations over the 10-year period, he will receive no pay award.
The price of unlocking innovation
Tesla outlined Musk’s unprecedented offer in a recent filing to the US Securities and Exchange Commission on 5 September.
In the document, company board members Robyn Denholm and Kathleen Wilson-Thompson said: “Growth that may seem impossible today can be unlocked with new ideas, better technology and greater innovation.
“We believe that Elon’s singular vision is vital to navigating this critical inflection point. We also recognise the formidable nature of this undertaking and as a result, the importance of having a leader who is not only willing and capable but eager to meet this challenge.”
They added: “Simply put, retaining and incentivising Elon is fundamental to Tesla achieving these goals and becoming the most valuable company in history.”
Bold gamble or winning strategy?
Musk’s divisive nature has been challenging for Tesla.
His recent forays into politics, including a short-lived alliance with Donald Trump and vocal support for far-right political parties, were cited by some analysts as the reason behind a 40% slump in European car sales for the manufacturer earlier this year.
The Wall Street Journal reported in May that the company was looking to replace Musk due to his work with Trump – claims Tesla said were “absolutely false”.
Dan Coatsworth, an investment analyst at London-based stockbroker AJ Bell said the pay package “beggars belief”, asking “is one person worth that much?”.
He added: “One minute Tesla’s board is wondering if Elon Musk is a liability to the company given his outspoken views and political distractions, the next they’re effectively saying ‘pick a number, any number’ to lock him in for as long as possible.”
In August this year, Tesla’s board awarded Musk an interim compensation package worth around US$29bn in restricted stock.
A previous 2018 pay deal worth US$55.8bn was annulled by a judge in the US state of Delaware in early 2024.
In a 200+ page ruling Judge Kathleen McCormick said the deal was “unfathomable”, suggesting that Tesla directors had been “swept up by the rhetoric” around the controversial CEO.
