A $1 trillion pay package is not easily put together. Tesla Inc.’s special compensation committee met 10 times, delayed the company’s annual meeting, and brought in six external advisers before finalizing a plan designed to keep Elon Musk at the company for at least seven and a half years.
The deal is structured around ambitious performance milestones tied to Tesla’s vehicle fleet expansion, full self-driving technology, robotaxis, and robotics. But even during negotiations, Musk repeatedly threatened to walk away if he didn’t get certain guarantees — most notably a 25% voting stake in Tesla and full compensation for past services.
Behind-the-Scenes Negotiations
The committee, led by Chair Robyn Denholm and Director Kathleen Wilson-Thompson, held multiple meetings with Musk to understand his vision for Tesla and how best to motivate him. According to Tesla’s proxy filing, Musk warned he might leave to pursue other ventures — including xAI, Neuralink, and SpaceX — if his demands weren’t met.
The committee also pressed Musk to scale back his political involvement, which investors feared was damaging Tesla’s brand. At the time, Musk had been involved with former President Donald Trump’s Department of Government Efficiency team.
The process became so extensive — involving 37 legal meetings and numerous adviser sessions — that Tesla postponed its annual meeting to November 6.
Why the Committee Relented
Musk’s 2018 “moonshot” package, which required Tesla to hit 12 milestones, was struck down earlier this year in a Delaware court. Yet Musk had already achieved all 12, a feat the committee said no other US CEO matched. In fact, an external study found 79% of CEOs wouldn’t have met even one milestone in the same timeframe.
The new package differs from 2018 by offering restricted shares instead of stock options, giving Musk voting rights immediately after earning them — a key step toward the 25% control he demanded.
The $1 Trillion Debate
The committee acknowledged criticism over awarding Musk such a massive package given that he is already the world’s richest man, with a net worth of $377.7 billion. If Tesla achieves its new market cap goals — between $2 trillion and $8.5 trillion — Musk’s holdings could be worth over $1.5 trillion.
“Some critics argue Musk needs no further incentive, but we believe these critiques misunderstand Musk and his motivations,” the committee wrote.
Despite the eye-watering numbers, Tesla insisted the package was necessary to keep Musk focused on the company at a time when competition for AI talent and leadership is more intense than ever.
