- Under a new proposal, if Tesla reaches certain milestones, Elon Musk could receive over $1 trillion.
- For Elon Musk to receive the payout, Tesla would have to reach a market valuation of $8.5 trillion.
- Musk must stay at the company for at least 10 years to receive the full payout.
A new pay package proposed by Tesla’s board on Friday could possibly make the company’s Chief Executive Officer Elon Musk the world’s first trillionaire, as long as a series of ambitious corporate goals are met.
In what the company described as an “ambitious plan to retain and incentivize Musk,” the CEO would receive a maximum payout representing an additional 12% stake in Tesla, per The Washington Post. But this payout is contingent on reaching milestones that would raise the company’s market value to at least $8.5 trillion by 2035.
If the milestones are reached, Musk’s payout would be worth over $1 trillion, per Business Insider.
This new offer is worth more than 18 times what Musk’s prior pay package, which was already a record-setting deal, is worth.
This proposal could give Musk 423.7 million additional shares of Tesla stock, which would be worth $143.5 billion at today’s stock value, per The Washington Post. Musk will only receive those shares if the value of Tesla’s stock reaches an overall value of $8.5 trillion. The current market value of the company is $1.1 trillion.
“Retaining and incentivizing Elon is fundamental to Tesla achieving these goals and becoming the most valuable company in history,” Robyn Denholm, chair of the Tesla board, and Kathleen Wilson-Thompson, a director on the board, said in a letter to shareholders, per Time.
Board members of Tesla said the pay package proposal came about after 10 meetings with the CEO, during which he threatened to turn his focus elsewhere if he didn’t receive a bigger stake in the company.
This proposal still has to be approved by shareholders and a vote is expected to be held at an annual shareholders meeting on Nov. 6, per Time.
Milestones Tesla needs to reach for Elon Musk to receive this payout
Hitting the necessary targets could prove to be difficult as other companies are also pursuing perfecting self-driving cars and robots.
Some of the first goals that Tesla would need to hit are the company reaching a market valuation of $2 trillion and achieving 20 million vehicle deliveries, per ABC News. Tesla had less than 2 million vehicle deliveries last year.
Tesla would also be required to have 1 million robotaxis in commercial operation and to deliver 1 million artificial intelligence bots.
Musk would have to remain at the company for at least seven and a half years to cash in any of the shares. To receive the full amount, he’d have to stay for at least 10 years, per The New York Times.
Another condition of the proposal includes Musk creating a framework for someone to succeed him as CEO, per ABC News. This proposed plan would also give Musk more voting power over the company.
These goals are especially ambitious following recent struggles the Texas company has faced. This year, the company’s shares have plunged 25%, largely due to blowback from Musk’s affiliation with President Donald Trump. Tesla is also facing intensifying competition.
Elon Musk is already the richest person in the world
Musk has been the world’s wealthiest person for several years and, as of Thursday’s close, his fortune was valued at $378 billion, according to Business Insider.
His estimated 13% stake in Tesla is his biggest source of wealth. His stakes in the private companies he leads also contribute, such as his 42% stake in SpaceX and 33% stake in XAI Holdings.
Musk is more than $100 billion wealthier than the next richest person, Oracle co-founder Larry Ellison, who has $275 billion.
His place as the world’s richest person is thanks to his net worth exploding over the past few years. Musk’s fortune was just under $40 billion at the start of 2020, and in 2013, it was $5 billion, per Business Insider.
How much is $1 trillion?
Many people have a hard time comprehending how much $1 billion is, let alone how much $1 trillion is.
A trillion has 12 zeros and is equal to a billion multiplied by one thousand, or a million multiplied by a million.
According to Thought Co., 1 trillion seconds equals 32,000 years.
If someone were to divide $1 trillion equally among everyone in the U.S., every person would receive a little more than $3,000.