Elon Musk’s trillion-dollar Pay Package: Can He Actually Earn It?

Tesla shareholders backed Elon Musk’s new decade-long compensation plan this week, a package that could be worth close to US$1 trillion in stock if a dozen market-cap and operational hurdles are hit. Approval reportedly topped three-quarters of votes cast, despite opposition from proxy advisers and several major institutions. The question now is less whether he deserves it and more whether he can actually deliver what’s required.

What Musk Has to Achieve

The award pays out in 12 tranches. Each tranche requires one market-cap milestone and one operational milestone. The valuation targets start around US$2 trillion and climb in steps to US$8.5 trillion, at which point Musk would receive stock equal to roughly 12% of Tesla over time, according to company filings and media reports.

The operational goals are equally audacious: producing 20 million vehicles a year, deploying one million robotaxis, and commercialising one million humanoid robots, along with profitability and cash flow hurdles. These are designed to move Tesla from being a pure electric vehicle (EV) company into a diversified technology and robotics business.

What Tesla Would Have to be Worth

Tesla’s market value is currently about US$1.1 trillion. To reach US$8.5 trillion within ten years implies around 23% compound annual growth in market capitalisation, before dilution. That is a staggering rate for a company already sitting near the top of global valuations.

On the production side, Tesla delivered 1.79 million vehicles in 2024 and expects a small decline in 2025. Hitting 20 million by the mid-2030s would require about 27% compound annual growth in deliveries, sustained for a decade in a market that’s cooling and facing ferocious Chinese competition.

The Bullish Argument

Supporters say the structure is all-or-nothing and that it aligns Musk’s rewards with breakthrough outcomes. If Tesla cracks full autonomy, builds a profitable robotaxi network, and turns its Optimus humanoid into a real product, the software-like margins could justify multi-trillion valuations.

Analysts such as Dan Ives of Wedbush call the deal a “motivational anchor” that gives Musk the freedom to focus on long-term innovation. Each tranche would serve as a signal to markets that Tesla is hitting another structural milestone, potentially reinforcing its growth story and lowering its cost of capital.

The Sceptical View

Execution risk is huge. Tesla recently quietly dropped its 20 million vehicle target from investor materials, citing weaker EV demand and a shift in focus to autonomy and AI. Margins have already been squeezed by price cuts, while rivals such as BYD, Nio and Xpeng are eroding Tesla’s dominance in key markets.

Regulatory and technical hurdles for full self-driving and robotaxis are formidable. The company has missed autonomy timelines before, and scaling humanoid robots adds another layer of risk.

Governance concerns have not gone away. If all tranches vest, existing shareholders would be diluted by around 12%. Proxy advisers ISS and Glass Lewis both recommended votes against the plan, calling it excessive and warning of “key-person risk”. Norway’s sovereign wealth fund also voted no, arguing that Tesla’s board had failed to demonstrate how such a large award mitigated dependency on Musk.

Scenarios: How This Could Play Out

1. Autonomy works, robots scale. If Tesla successfully deploys a robotaxi network and sells humanoid robots at scale, the operating leverage could be enormous. Software economics on hardware volumes would support a multi-trillion valuation, and Musk would hit most of his milestones.

2. EV and energy grind, autonomy delayed. Tesla grows its energy storage business and maintains EV leadership but fails to commercialise autonomy. Market cap compounds modestly, but the award’s upper tranches remain out of reach.

3. Fragmentation and distraction. Musk divides his attention among Tesla, X, and SpaceX. Autonomy and robotics slip, and investors tire of the story. The stock drifts, dilution bites, and the pay package becomes a governance cautionary tale.

The Bottom Line

Shareholders have made a high-risk, high-reward bet on Musk’s ability to deliver simultaneous breakthroughs in autonomy, robotics, energy and manufacturing within a decade. To collect the full bounty, Tesla must reach an US$8.5 trillion valuation and transform from a carmaker into an AI-driven technology conglomerate.

Possible? Yes. Probable? Only if the science fiction turns into quarterly earnings before the decade is out.

Sources: Financial Times, Reuters, Business Insider, The Guardian.