Tesla Proposes Musk Pay Package Worth as Much as $1 Trillion Over Decade
The unprecedented deal would let the world’s wealthiest person receive installments of shares if Tesla hits a series of market-capitalization and other milestones
By Gareth Vipers and Theo Francis
The proposed pay deal for Elon Musk is set to go to a shareholder vote in early November. Photo: chip somodevilla/ReutersTesla’s board is asking investors to approve a new pay package for Chief Executive Elon Musk that could deliver to him as much as $1 trillion in stock over the next decade.
The proposed deal would allow Musk—already the world’s wealthiest person—to receive installments of shares if Tesla hits a series of market-capitalization and business milestones, according to a securities filing published Friday.
The maximum payout would give him an additional 12% stake in Tesla, if the company reaches a market value of $8.5 trillion—nearly eight times its current valuation.
At that level, the proposed award would be valued at slightly more than $1 trillion, or about the same as the company’s entire current market capitalization.
Tesla’s board said the unprecedented pay package is intended to keep Musk focused on the electric carmaker.
The Tesla brand and its sales have taken a hit from Musk’s political activities and now-frayed alliance with President Trump.
This spring, Tesla board members reached out to executive search firms to work on a formal process for finding Tesla’s next CEO and some pressed the longtime leader to spend more time at the company, The Wall Street Journal previously reported.
Tesla Chair Robyn Denholm later said the board had confidence in Musk and its growth plan, and Musk stepped aside from his White House advisory role in May.
“Retaining and incentivizing Elon is fundamental to Tesla…becoming the most valuable company in history,” Denholm said in a letter to investors Friday.
The package was “designed to align extraordinary long-term shareholder value with incentives that will drive peak performance from our visionary leader.”
The proposal would lift Musk’s stake in the electric-vehicle maker to as much as 29% if all targets are met, according to the filing.
It would also boost his voting power.
Musk has previously said he wanted roughly 25% voting control of Tesla to keep his focus on the company.
Tesla shares closed at $350.84, up 3.64%, Friday.
20 million Teslas
In addition to market-cap milestones, payouts would depend on Tesla hitting any of a dozen business and financial targets, though not in any particular order.
These include delivering 20 million Tesla vehicles or a million nonvehicle robots over the next decade.
Tesla has sold about eight million vehicles, including 1.8 million in 2024.
Other product goals include putting a million robotaxis into service and reaching a three-month average of 10 million subscribers for Tesla’s Full Self Driving service.
A single robotaxi could count as a delivered vehicle and a Full Self Driving subscription.
Musk can receive other tranches of stock based on reaching adjusted profit thresholds ranging from $50 billion to $400 billion.
The measure reflects earnings before interest, taxes, depreciation and amortization, and excludes the effects of asset impairments, stock-based pay and gains and losses on digital assets such as cryptocurrency.
Tesla reported $16.6 billion in adjusted Ebitda for 2024.
To illustrate the scale of the market-cap targets, the company described each as a multiple of another company’s current market valuation: The first was described as 36 times General Motors, while others were described as double Apple or Nvidia’s values.
The cost to the company for the new equity award is about $88 billion under accounting rules, Tesla said, though a final figure will be determined with shareholder approval.
That figure also goes into what Tesla reports to shareholders as Musk’s 2025 pay in next year’s definitive proxy statement.
Together with more than $20 billion for an interim equity award announced in August, Tesla could report around $114 billion in total 2025 pay for Musk, said Courtney Yu, director of research for compensation-data firm Equilar.
That would be the highest pay package on record by far, Yu said.
Musk’s 2018 pay deal, with an accounting value at the time of $2.3 billion, would then become the second-largest.
No. 3 would be longtime Blackstone CEO Stephen Schwarzman, at $1.4 billion in 2008.
Shareholders are due to vote on the proposals Nov. 6.
The new package requires approval by a majority of shares voted, including those held by Musk and his brother Kimbal Musk, also a Tesla director.
Tesla’s large base of individual investors has generally supported rich pay deals for Musk and played a key role in winning shareholder approval to reinstate Musk’s earlier pay package in a mostly symbolic vote last year.
“I don’t mind at all paying him the little portion of that success if we get the other side,” said Alexandra Merz, a Tesla investor and popular social media voice who goes by the handle “Tesla Boomer Mama.”
Still, the scale of Musk’s compensation at Tesla has been a point of contention.
His 2018 pay deal was struck down by a Delaware judge, who called the process was deeply flawed.
Tesla’s directors said the then-record stock-option deal, amounting to more than $55 billion in compensation, was necessary to keep Musk focused on the carmaker amid a sales slump and increased competition.
He has run the company without a pay package since then, though last month the Tesla board approved an “interim” stock award for Musk tentatively valued at $23.7 billion.
The interim award depends on the outcome of a continuing appeal over his 2018 pay deal.
Unusual provisions
Musk would receive voting rights to the shares awarded under the new package once market-cap and other targets are achieved, potentially before they are vested and he gains full ownership of them.
Until then, the shares will be voted proportionally to those of other shareholders, the proxy says.
In some circumstances, Musk could earn some tranches of shares without meeting product goals, in the event of a natural disaster, war, pandemic or new laws or government actions that restrict the design, performance, sale or marketing of a product.
An unusual provision in the award could essentially wipe out the value of shares he has earned if Tesla’s share price falls far enough by the time the shares vest—to $334 for shares earned before 2030, or the share price in spring 2032 for any earned subsequently.
Separately, Tesla is asking investors to approve another 208 million shares earmarked for Musk, or $73 billion at recent prices.
The company said he would only receive shares from the pool to replace any he might lose as a result of litigation over his 2018 pay.
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