Elon Musk’s new pay package from Tesla puts him on track to possibly become the world’s first trillionaire. Shareholders approved the new deal, announced in September, during an annual company meeting.
World’s first trillionaire
Voters holding more than 75% of the company’s shares voted to approve the deal. That excludes the percentage of the company Musk already owns.
He doesn’t take a salary as Tesla’s CEO, but the new pay package is a giant stock grant. It would give him up to 423.7 million additional Tesla shares over the next decade, increasing his ownership from 13% to 25%.
Those shares, if the company expands as required under Musk’s agreement, could be worth $1 trillion, or $1,000,000,000,000.
Musk, already the richest man in the world, responded by saying, “I super appreciate it.”
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How it happens
That will only happen if Tesla reaches an $8.5 trillion market cap in ten years. It requires Tesla shares to jump in value by 466% over the next decade and would put them 70% above Nvidia, currently the world’s most valuable company.
The pay package lays out a dozen milestones for Tesla to reach so Musk can fully cash in on the new deal.
Those milestones include market valuations, 20 million Tesla vehicles delivered, 10 million full self-driving subscriptions, 1 million Bots (Tesla’s Optimus) sold and 1 million robotaxis in commercial operation.
Each milestone comes with benefits for Musk.
Opposition to the plan
The approval didn’t come without some pushback.
Proxy adviser Institutional Shareholder Services (ISS) recommended voting against the pay package, saying “there are unmitigated concerns surrounding the special award’s magnitude and design.”
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Elon Musk’s net worth is estimated to be around $490 billion.
Tesla pushed back against that.
“ISS’s unfounded and nonsensical recommendation against Ira proves how disconnected from reality they are,” the company posted on X.
Another proxy adviser, Glass Lewis, also recommended voting against. They shared the potential decrease in shareholder value and some details of the proposed payment terms, which “warrant significant concern.”
Others argued it was excessive or unmerited. They pointed to some of Musk’s work outside Tesla, including his time as a government employee overseeing the Department of Government Efficiency (DOGE).
Tesla sales fell significantly during Musk’s tenure in that role.
Had shareholders voted no, it likely would’ve meant the end for Musk at Tesla. The company’s board said in a filing that Musk had said he would leave the company if he didn’t get the assurances of control that this package provides.
Lawsuit
This pay package comes even as Musk continues to litigate his last proposed pay package, a $56 billion package in 2018.
Tesla shareholder Richard Tornetta filed suit against Musk, Tesla and others, accusing board members of violating their fiduciary duties by failing to act in the best interests of shareholders.
Tornetta said Musk has too much influence over the board and how much money he stands to make.
That lawsuit continues in the Delaware Supreme Court, though it’s unclear how the new agreement affects the litigation.
