Tesla offers record $1 trillion pay deal to Elon Musk, tying future to AI and robots

Tesla has proposed a staggering $1 trillion pay package for CEO Elon Musk, the largest in corporate history, betting that the billionaire can transform the carmaker into an AI and robotics leader even as global demand for electric vehicles slows.

The award, which could lift Musk’s stake in Tesla well beyond his current 13%, depends on the company reaching a market valuation of $8.6 trillion in the next decade, an eightfold jump from today’s level. Tesla shares rose 3% after the announcement.

“This is a ridiculously large pay package. It raises lots of questions,” said Brian Quinn, professor at Boston College Law School. “But Musk moved Tesla’s legal home to Texas, where shareholders have fewer tools to challenge it. That makes approval far more likely.”

The package comes at a critical moment. Tesla faces rising competition from Chinese EV makers and cooling demand in key markets. But Musk insists the company’s future lies in autonomous robotaxis and humanoid robots, which he has said could one day represent 80% of Tesla’s value and push its worth to $25 trillion.

“While bold compensation tied to performance is nothing new, the sheer scale here sets a new bar for CEO incentives,” said Adam Sarhan, chief executive of 50 Park Investments. “It will dominate boardroom debates everywhere.”

Unlike other executives, Musk will not receive a salary or cash bonus. Instead, the payout is tied to performance milestones such as mass robotaxi deployment and scaling robot production. The plan, reviewed by independent directors, will go to a shareholder vote in November.

Critics argue Musk already has ample motivation as Tesla’s largest shareholder and warn the plan could dilute investor holdings and deepen governance risks. Still, the board maintains the award is necessary to secure Musk’s focus amid his growing ventures, which include SpaceX, xAI and political pursuits.

“Tesla’s stock price is basically all vibes and has very little to do with its actual performance,” Quinn added. “But given Musk’s influence, I suspect they will approve this package.”

The new Texas law also shields Tesla from the type of lawsuits that derailed Musk’s previous $56 billion pay plan in Delaware. Under the Lone Star State’s rules, only investors holding 3% of stock can sue, leaving Musk himself, Vanguard, BlackRock, and State Street as the only ones eligible.

Read more on New car registrations fall 7.66% in France, Tesla sales hit hardest