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Published on
September 5, 2025
5 min read
Tesla Proposes $1Trillion Dollar Pay Package for Musk, Links it to Market Cap Growth
Tesla has proposed a trillion dollar pay package for its CEO, Elon Musk and asked investors to approve it. According to CNBC, the compensation plan features 12 tranches of shares to be issued to Musk only if Tesla achieves specific milestones over the next 10 years.
Expanding Musk’s Voting Power
Elon Musk’s trillion dollar compensation plan would give the Tesla CEO over 423 million additional shares. Currently, Musk’s stake in Tesla stands at about 13%. The latest pay package, which Musk has been demanding since 2024, expands his voting power in the EV maker.
Speaking to CNBC, Tesla chairperson Robyn Denholm said the plan is aimed at keeping the CEO “motivated and focused on delivering for the company.” “If he performs, if he hits the super ambitious milestones that are in the plan then he gets equity, it’s 1% for each half a trillion dollars of market cap, plus operational milestones he has to hit in order to do that,” Denholm said.
The latest pay package highlights Tesla’s dependence on Musk as the company struggles with rising competition from Chinese EV makers, reducing demand for EV, slowing electric vehicles, and pressure to achieve AI ambitions.
“Shareholders and market participants may not always love what Elon does, but these award packages continue to show that Tesla believes that he is the key man on innovation and the biggest threat to the company is Elon leaving,” APTUS Capital Advisors’ Head of Equity and Portfolio Manager David Wagner, said.
Impact of Musk’s Pay Package on Tesla
Musk’s pay package will have a big impact on Tesla’s future. The initial award in the plan is tied to the company achieving a $2 trillion market capitalization. This is almost double the current market value. The final award will be made once Tesla’s market capitalization hits the $8.5 trillion mark.
Other operational milestones in the performance award include delivery of 20 million Tesla units and attaining 10 million active FSD subscriptions. Musk’s pay plan is also linked to AI performance of the company including delivery of 1 million robots, and having a million robotaxis in commercial operation. In August 2025, Tesla’s AI ambitions faced headwinds after the company shut down the Dojo supercomputer project and disbanded the team. The move terminated the EV maker’s in-house efforts to develop chips for powering its driverless technology.
In a filing made on September 5, 2025, Tesla said it will be asking shareholders to decide whether the EV maker should invest in Musk’s xAI during the November 6, 2025 meeting. Musk shared the idea publicly for the first time in an informal X poll in July 2025. In the poll, he asked whether Tesla should back xAI to the tune of $5 billion. In July 2025, xAI launched Grok 4, an advanced AI model that put it in direct competition with OpenAI’s ChatGPT and Google’s Gemini.
The Justification Question
Some analysts have raised questions about whether Tesla’s trillion dollar pay package is justified. “A $1 trillion pay package, is one person worth that much? Musk is a visionary, has endless energy, and the confidence to succeed – all qualities required in leadership. But he also presides over a company that has lost its edge, is being overtaken by rivals, and whose brand has been tarnished by Musk’s actions outside of Tesla. Surely Musk should be fighting for his job, not Tesla’s board fighting to keep him,” AJ Bell Investment Analyst Dan Coatsworth said.
Analysts are also concerned about the effect that Musk’s latest pay deal could have on executive compensation in the U.S.
“If Musk can deliver results in line with these targets, the package could spark a new era in executive compensation, but if not, it could invite criticism about governance and pay equity.” 50 Park Investments CEO Adam Sarhan said.
In 2024, a Delaware Court ruled that his 2018 pay plan be rescinded for being excessive. The court also ruled that the Tesla board had granted it improperly as Musk had controlled the negotiations at the company and that the board had not provided shareholders the information they needed before asking them to approve the pay plan. Details of the new plan came a month after Tesla announced a $29 billion pay package for Musk as a replacement for the 2018 plan.
