To receive a $1,000 billion bonus package, Elon Musk needs to bring Tesla to a market capitalization of $8,500 billion: The unimaginable ambition of the richest man in the world

Tesla says it needs to offer a historic compensation package to CEO Elon Musk.

What do you give a man who can already buy anything? How about giving them… $1 trillion?

That’s exactly what Tesla’s board of directors has just decided to “reward” CEO Elon Musk. Specifically, last Friday, the American electric car company announced a new compensation package for shareholders to consider, which could give Musk up to 423.7 million additional Tesla shares over the next 10 years.

Those potential shares are currently worth “only” about $148.7 billion at Friday’s closing price. But if Tesla’s stock rises as the package envisions, they will be worth nearly $1 trillion when Tesla hits certain milestones: Musk will only get all of them if Tesla’s market cap reaches $8.5 trillion—about eight times its current value and double the highest value of any company in the world today.

Explaining in a shareholder filing, Tesla’s board said it needed to offer a historic compensation package or risk losing a leader who has become synonymous with the Tesla brand — for better or worse.

They also revealed that during the negotiations, “Musk had indicated that he could pursue other, more influential interests if he did not get the guarantees he wanted.”

According to the board, “Musk is uniquely qualified to transform Tesla and realize its long-term mission at an unprecedented level.”

However, Tesla has also expressed displeasure with Musk treating the company as a part-time job. He has devoted most of his attention to other companies such as SpaceX, Starlink, AI company xAI – now owns Platform X (formerly Twitter), which Musk spent $ 44 billion to buy in 2022. In addition, he has increasingly involved in politics, including plans to form a third party.

Earlier this year, when Musk was still leading the Department of Government Efficiency (DOGE), rumors swirled that Tesla’s board had even begun looking for a successor. But both chairwoman Robyn Denholm and Musk later denied it. Shortly after, Musk announced that he was leaving DOGE to focus on Tesla again.

“The board’s message to Elon is simple: ‘We want you to focus on Tesla,’” Gene Munster, managing partner at Deepwater Asset Management, wrote in a note. “Implicit in that message is the promise that you will have the control you desire (25% stake), and that it will be worth your while.”

Musk demands control

Musk has repeatedly stressed that control of Tesla is paramount. In January 2024, he wrote on X that he wanted to own at least 25% of Tesla.

“I’m not comfortable building Tesla into a leader in AI and robotics without having about 25% of the voting power. Enough to have influence, but not so much that I can’t be toppled,” Musk wrote. “Otherwise, I’d rather build products outside of Tesla.”

Ross Gerber – CEO of Gerber Kawasaki, one of Tesla’s early investors, believes that this entire compensation package stems from the fear that Musk will be ousted from Tesla because he only owns 13% of the shares.

Munster and many Tesla backers believe Musk is right: The company’s future will be in AI, self-driving cars, robo-taxis, and humanoid robots. If successful, Tesla could reach a market cap of $8.5 trillion and adjusted operating income of $400 billion—20 times its previous record.

“We’ve only scratched the surface of ‘physical AI’: Right now, its applications are pretty fun, limited to a few robot taxi experiments from Waymo and Tesla,” Munster said. “Ultimately, physical AI will impact everything that moves, opening up a huge market that’s hard to imagine.”

Ambition

However, critics say Musk will continue to fail to make the vision a reality – just as he promised Tesla would have fully self-driving cars but never achieved them.

“Elon Musk has been saying since 2014 that ‘next year we’ll have fully autonomous cars.’ That never happened, but that promise is still valued by Wall Street in the billions,” said Gordon Johnson, a longtime Tesla critic. “Musk is a master manipulator. He keeps the stock high by making statements that other CEOs are afraid to make.”

Still, Tesla shareholders are likely to approve the massive package. They have approved previous compensation packages, even reaffirming one that was struck down by a Delaware court for being unfair in 2024.

The argument is that Musk will get nothing from the new package if the company doesn’t grow significantly—which means shareholders won’t get anything either. The first goal is to get Tesla to a $2 trillion valuation, nearly double its current value, before Musk gets any stock.

“They think, ‘I don’t have anything to lose,’” Gerber said. “The goal is so high that if Musk achieves it, I’ll make a lot of money. So why should I care if he gets $1 trillion?”

“But if you think about it, it makes no sense,” he concluded.