Tesla Proposes $1 Trillion Pay Package for Elon Musk Tied to Ambitious AI and Robotics Goals

Reviewed byNidhi Govil

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Tesla's board has unveiled a groundbreaking $1 trillion pay package for CEO Elon Musk, contingent on achieving extraordinary milestones in AI, robotics, and market valuation over the next decade. The proposal aims to retain Musk's focus on Tesla and drive the company towards unprecedented growth.

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Tesla's Trillion-Dollar Gamble on Musk's Vision

Tesla's board has proposed an unprecedented $1 trillion pay package for CEO Elon Musk, designed to keep him at the helm of the electric vehicle giant for the next decade while pushing the company into new frontiers of AI and robotics

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. This ambitious plan, which dwarfs Musk's previous $56 billion package from 2018, is contingent on achieving a series of formidable targets that would transform Tesla into a technological powerhouse far beyond its current status.

Milestones and Metrics

The pay package is structured around 12 milestones that Musk must hit over the next 10 years

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. These include:

  1. Increasing Tesla's market capitalization to $8.5 trillion from its current $1.09 trillion
  2. Boosting adjusted earnings to $400 billion, a 24-fold increase from current levels
  3. Selling 12 million more electric vehicles
  4. Deploying 1 million robotaxis
  5. Selling 1 million AI-powered humanoid robots (Optimus)

To receive any payout, Musk must remain CEO for at least 7.5 years, with the full amount requiring a 10-year commitment

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The AI and Robotics Gambit

Tesla's board is betting heavily on the company's potential in AI and robotics. The Optimus humanoid robot, which Musk claims could account for 80% of Tesla's future value, is central to this vision

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. To meet the top EBITDA profit target of $400 billion, Tesla might need to sell over 100 million robots annually, a staggering figure that highlights the ambitious nature of these goals.

Market Reaction and Investor Concerns

While some investors welcome the focus on new products and see the pay package as a way to address Tesla's current challenges, others question the feasibility of these targets

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. Tesla's stock has fallen 30% since mid-December, and the company faces increasing competition in the EV market

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Regulatory and Shareholder Approval

The proposed package must be approved by shareholders at the November 6 meeting

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. It comes in the wake of a Delaware court striking down Musk's 2018 pay deal, which Tesla has appealed

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. The new plan would replace the older one if the appeal fails.

Implications for Tesla's Future

If successful, this pay package would not only make Musk the world's first trillionaire but also significantly increase his control over Tesla. His ownership stake could rise from 13% to potentially 25% after taxes and dilution

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. This aligns with Musk's stated desire for greater voting rights to protect the company from activist investors or takeovers as it develops powerful AI technology and robots.

Criticism and Debate

The sheer scale of the proposed package has reignited debates about executive compensation and wealth inequality. Critics argue that such enormous payouts are excessive, especially given the current economic climate and Tesla's recent challenges

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. However, proponents maintain that aligning Musk's interests with long-term shareholder value is crucial for Tesla's future success in the competitive and rapidly evolving tech landscape.

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