Tesla Proposes a Mammoth $1 Trillion Compensation Package for CEO Elon Musk

Tesla (NYSE: TSLA) has unveiled a new pay package for CEO Elon Musk that could be worth a staggering $1 trillion. The proposal, which will be put to a shareholder vote on November 6, could make him the world’s first trillionaire if fully achieved.

The new plan is a direct response to the ongoing legal challenges surrounding Musk’s 2018 compensation package, which a Delaware court has twice revoked. Despite shareholders voting to reinstate that deal in June 2024, the legal battles prompted Tesla’s board to create a new framework to ensure Musk remains “eager” and “focused” on the company’s long-term vision.

Tesla Board Proposes New Compensation for Musk

The compensation would be in the form of stocks and linked to several milestones that must be met over the next 10 years. These include

• Market Capitalization: Tesla’s market value, currently around $1.1 trillion, would need to skyrocket to at least $8.5 trillion for Musk to unlock the full payout.
• Vehicle Production: The company must achieve an annual vehicle delivery rate of 20 million, a nearly tenfold increase from its current levels.
• Robotics and AI: The plan includes targets for the deployment of 1 million “robotaxis” and 1 million of the company’s humanoid “Optimus” robots.
• Profitability: Financial goals are equally aggressive, with adjusted EBITDA needing to increase from approximately $17 billion to $400 billion.

The compensation would be awarded in a series of tranches, with each payout contingent on a combination of market capitalization and operational milestones. To receive any of the shares, Musk would need to remain with the company for at least 7.5 years, with the full package requiring a 10-year commitment.

Musk’s Ownership Stake Could Rise

If approved by shareholders, the plan could increase Musk’s ownership stake in Tesla to over 25%, significantly consolidating his control over the company. Notably, in a post on X in January 2024, Musk said that “I am uncomfortable growing Tesla to be a leader in AI & robotics without having ~25% voting control. Enough to be influential, but not so much that I can’t be overturned.”

Currently, Musk owns around a 13% stake in Tesla, and his ownership fell after he sold shares to fund his Twitter acquisition. His public call for higher voting rights in Tesla was seen as a ploy to pressure Tesla’s board for a new compensation structure.

More recently, during Tesla’s Q2 2025 earnings call last month, Musk said that he hoped that the issue of him having higher voting rights would be taken up at the upcoming shareholder meeting.

“I don’t want to find that I’ve got like so little control that I can easily be ousted by activist shareholders after having this army of humanoid robots. I think as I’ve mentioned before, I think my control over Tesla should be enough to ensure that it goes in a good direction, but not so much control that I can’t be thrown out if I go crazy,” said Musk during the earnings call.

Critics Slam Tesla for Proposing $1 Trillion Compensation for Musk

“This is a ridiculously large pay package. It raises lots of questions, but last year Musk moved Tesla from Delaware to Texas in order to avoid all those questions,” said Brian Quinn, professor at Boston College Law School.

He added, “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.”

Commenting on Musk’s new pay structure, Adam Sarhan, chief executive of 50 Park Investments in New York, said, “While bold compensation tied to performance is nothing new, the sheer scale here sets a new bar for CEO incentives and will dominate boardroom debates everywhere.”

Notably, Musk has been able to prevail over the board as well as shareholders in the past, and some believe the case won’t be different this time around as well.

According to Douglas Chia, president of Soundboard Governance, an independent corporate governance consulting firm, “It really seems like what Elon wants, Elon gets from the board and from his shareholders.” He added, “As ridiculous as it is, they’ll pass it, I have no doubt.”

Is Musk Spending Enough Time at TSLA?

Critics have also slammed the Tesla board for failing to secure a higher time commitment from Musk despite offering him generous compensation.

Musk has formed a new political party after his bitter feud with President Donald Trump. Notably, Musk headed Trump’s Department of Government Efficiency (DOGE) until May and was tasked with eliminating “wasteful” government expenses. However, the bonhomie between Musk and Trump ended shortly after the world’s richest person left the White House.

Musk’s expanding his political activity with the new party is also making markets apprehensive about the billionaire’s ability to devote adequate time to Tesla. Such concerns have been around for quite some time, as apart from Tesla, Musk also heads several other companies like SpaceX and Neuralink. Of late, he has added X and his AI startup xAI to the ever-growing list of companies that he owns.

Notably, one of the reasons critics slam Musk’s multi-billion-dollar compensation package is that, despite the mammoth package, which was the largest in US corporate history, the Tesla board failed to get a commitment from Musk to spend more time at the company.

Tesla Chair Defends Musk’s Compensation

Meanwhile, as has been the case in the past, Tesla’s board has sought to justify the mammoth pay package. In a shareholder letter signed by shareholder letter signed by Chair Robyn Denholm and director Kathleen Wilson-Thompson, Tesla said, “Simply put, retaining and incentivizing Elon is fundamental to Tesla achieving these goals and becoming the most valuable company in history.”

Musk has been trying to steer Tesla from an EV company to a tech giant focusing on artificial intelligence, robotics, and humanoids, which Musk believes could make Tesla the biggest company on the planet. However, the company’s core automotive business has been facing several challenges, with sales falling for the first time last year. The slowdown has only deepened in 2025, and Tesla’s deliveries fell in double digits in the first half of the year.

Musk has warned of a few “rough quarters” ahead as the One Big Beautiful Bill Act does away with the EV tax credit, which could hurt EV sales.