Tesla's board of directors has proposed an unprecedented compensation package for CEO Elon Musk worth as much as $1 trillion, depending on whether the company meets its aggressive future goals. Musk would be eligible for as many as 423.7 million Tesla shares in the next decade under the plan.
At Friday's closing stock price, those shares are worth about $148.7 billion. Musk would only receive the full package, however, if Tesla achieves a market capitalization of $8.5 trillion—about eight times its current value and twice the largest of any publicly traded company on record, Reuters says.
The board underscored Musk's one-of-a-kind leadership in a filing with CNN, saying, "Musk alone has the leadership qualities needed to revolutionize Tesla and fulfill its long-term vision at an unprecedented level." The filing further mentioned that Musk may venture into other pursuits without assurances from the board.
Tesla has worried about Musk splitting his focus among SpaceX, Starlink, xAI (owner of X), and political endeavours. Earlier this year, the board was said to have weighed naming a successor, although both Musk and chair Robyn Denholm dismissed such intentions. Musk then vowed to commit himself full-time to Tesla.
Gerber Kawasaki CEO Ross Gerber, one of Tesla's earliest investors, called the compensation package "all about Musk being afraid of getting kicked out of Tesla because he only owns 13 per cent."
Musk made it plain that he desires a minimum of 25 percent voting control of Tesla. In January 2024, he posted on X, "I am uncomfortable growing Tesla to be a leader in AI & robotics without having about 25% voting control. Enough to be influential, but not so much that I can't be overturned. Unless that is the case, I would prefer to build products outside of Tesla."
The new compensation plan effectively ensures that Musk has the power he wants, and also assures the board that he is not going anywhere.
While admitting that, despite the failure to meet deadlines, Musk has a special knack for motivating shareholders and maintaining high stock prices, critics agree. Gordon Johnson, who is as much a critic of Tesla as anyone, had this to say, "Elon Musk is a master manipulator. He's been able to keep the stock elevated. The reason the board is paying him is he's willing to say things that other CEOs aren't willing to say or get away with."
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