Tesla (TSLA) Stock: Board Proposes Historic $1 Trillion Pay Package for Elon Musk

TLDR

Table of Contents

Tesla’s board has proposed an unprecedented $1 trillion compensation package for CEO Elon Musk, the largest in corporate history
The plan requires Tesla to reach a market value of $8.5 trillion over the next 10 years, nearly eight times its current valuation
Musk would receive up to 12% additional Tesla stock, bringing his total stake to around 25% if all targets are met
The package includes operational milestones like delivering 20 million vehicles, 1 million Optimus robots, and operating 1 million robotaxis
Tesla shares rose 1.9% in premarket trading following the announcement, though the stock is down 16% year-to-date

Tesla has unveiled a compensation proposal that dwarfs anything seen in corporate America. The electric vehicle maker wants to give CEO Elon Musk a potential $1 trillion payday.

Breaking news: Tesla’s board has proposed a new pay package for chief executive Elon Musk worth $1tn over the next decade if he is able to hit a series of formidable targets. https://t.co/4RGFytV1WX pic.twitter.com/YyqUl3yyri
— Financial Times (@FT) September 5, 2025

The board filed the proposal on Friday, setting performance targets that would make Musk even richer than he already is. Tesla’s current market value sits around $1 trillion.

But this isn’t free money. Musk has to earn every dollar through a series of ambitious benchmarks over the next decade.

Market Value Targets Push Tesla Into Uncharted Territory

The plan demands Tesla reach a market capitalization of $8.5 trillion. That would make it more than twice as valuable as Nvidia, currently the world’s most valuable company.

Tesla’s stock peaked at about $1.5 trillion in late 2024. Getting to $8.5 trillion means growing the company’s value by roughly $7.5 trillion.

The compensation comes in 12 separate tranches. Each tranche requires hitting both market cap milestones and operational targets.

Musk gets no salary or cash bonus under this structure. Everything depends on Tesla’s performance and stock price.

The package would push Musk’s ownership stake to at least 25%. He currently holds about 13% of the company.

Tesla shares jumped 1.9% in premarket trading after the news broke. The stock has struggled this year, falling 16% compared to the broader market’s gains.

This proposal replaces Musk’s previous $56 billion package from 2018. A Delaware court struck down that earlier deal, calling it excessive.

Operational Milestones Set Sky-High Expectations

Tesla isn’t just asking Musk to pump up the stock price. The company has set specific business targets that sound like science fiction today.

Musk must deliver 20 million Tesla vehicles annually. The company sold about 1.8 million cars in 2024.

The plan also requires deploying 1 million robotaxis in commercial operation. Tesla just launched its robotaxi service in June with a handful of cars in Austin.

Another target involves delivering 1 million Optimus humanoid robots. These robots currently exist only in prototype form.

Tesla also wants adjusted earnings of $400 billion. The company’s current annual revenue is about $96 billion.

The board admits these targets are aggressive. Chair Robyn Denholm and director Kathleen Wilson-Thompson wrote that keeping Musk is “fundamental to Tesla achieving these goals.”

Musk has threatened to pursue AI and robotics projects elsewhere without roughly 25% voting control. He oversees four other companies including SpaceX and xAI.

The CEO’s attention has been divided recently. He spent months working in the Trump administration as a special government employee before their relationship soured.

Tesla’s business showed strain during Musk’s government stint. The company reported two of its worst quarters in years and saw a 13% decline in worldwide vehicle deliveries.

But Tesla has regained some momentum in recent months. The robotaxi launch represents progress toward Musk’s vision of an autonomous vehicle future.

The board acknowledged concerns about Musk’s outside activities and public statements. Some investors worry his political involvement and social media presence distract from Tesla’s business.

Tesla changed its corporate home from Delaware to Texas in 2024 after the court battles over Musk’s previous pay package. The company also modified its bylaws to require shareholders to own at least 3% before filing lawsuits.

The filing revealed Tesla granted Musk an interim $30 billion stock award in August while developing this larger package.

Musk must stay as CEO or in an executive role overseeing product or operations to receive the shares. The final two tranches also require him to help develop a succession plan for Tesla’s leadership.

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