Tesla has promised Musk $1 trillion if it grows to $8.5 trillion, is it possible?

Tesla's board of directors has prepared a record-breaking stock compensation plan for Elon Musk totaling $1 trillion over 10 years. To achieve this, the company under Musk - already the world's richest businessman - must achieve ambitious milestones, including increasing its market value by more than eight times and increasing profits many times over. Achieving such goals now looks unrealistic, says the Financial Times. Tesla shares jumped by 5% in trading on Friday.

Tesla's board of directors has proposed a new compensation package for CEO Elon Musk totaling $1 trillion over the next decade if he can achieve a series of highly ambitious goals, according to a disclosure on the company's website.

Under the plan, Musk will receive no salary or bonuses during this period, but will be eligible for a bonus in the form of stock packages as certain targets are met: building Tesla's market value, significantly increasing profits, and selling millions of cars, self-driving cars and AI-powered robots. If all conditions are met, Musk will be entitled to 423 million Tesla shares in 12 tranches, each with approximately 35 million securities.

The additional shares that Musk could receive would increase his stake in the electric car maker to at least 25%, Bloomberg noted. This is the share Musk mentioned during negotiations as a condition for continuing to work in the company, according to Tesla's disclosure.

Tesla shares jumped 5% after the opening of trading on Friday, September 5. However, compared to the beginning of 2025, they are now 13% cheaper.

The incentives in the new plan are aimed at keeping Musk's focus on Tesla as it expands into new areas including robotics and artificial intelligence, Bloomberg writes.

However, getting the maximum payout of 423 million shares will be an extremely difficult task, says the Financial Times. Thus, Musk will have to increase Tesla's market capitalization to $8.5 trillion from the current roughly $1.1 trillion. By comparison, this target is more than double the capitalization of global AI processor market leader Nvidia, which is now the world's most valuable company with a $4 trillion market capitalization. Tesla must also sell 12 million more electric cars; reach 10 million subscriptions to the autonomous driving system; register and put on the roads 1 million robotaxis; sell 1 million robots based on artificial intelligence and gradually increase adjusted profit 24 times - up to $400 billion.

Those targets look remote when you consider that Tesla's adjusted profit last year was $16.6 billion; the company only produced about 8 million cars; hasn't launched a single robot or robotaxi in the broad market; and has relatively few subscribers to its Full Self-Driving driver assistance system, the FT notes.

The first frontier for remuneration is a capitalization of $2 trillion - twice the current capitalization. If the company with Musk does not reach it in 10 years, the CEO gets nothing. Further market value targets are raised first in $500 billion increments, and then twice in $1 trillion increments - all the way up to $8.5 trillion. Reaching each level must be paired with one of the other earnings or sales targets, and must remain valid for six months afterward to activate the tranche. Musk will not be able to sell shares for seven and a half years and will be required to coordinate any major transactions with the board to reduce stock price volatility.

By the end of the plan's 10-year term, when Musk turns 64, he would be required to "participate on a board to further develop a structure for long-term succession as CEO," the proposal says.

To reach his goals, Musk will have to reverse the decline in Tesla's stock, which has fallen sharply in 2025. Sales have fallen sharply amid negative consumer reaction to Musk's divisive political activism and investor concerns about his conflict with President Donald Trump, who has also canceled a slew of incentives for electric cars and solar power, the FT writes.

The board will put the new package to a shareholder vote at its annual meeting on Nov. 6 in Austin, Texas. If Tesla receives more than 50% of the votes, an additional 423 million shares will be issued on top of the existing 3.2 billion.

The new remuneration package from the board echoes the 2018 agreement, which was also thought to be unattainable but was eventually fully realized after Tesla's value rose from $59 billion to more than $650 billion, the FT noted. That brought Musk $56 billion in stock options - the largest reward in history, the newspaper said.

But the controversial package was overturned by a judge in Delaware last year, who ruled that it was excessive and the board was too closely dependent on Musk, after a seven-year legal battle.

Tesla appealed to the state Supreme Court and moved its incorporation to Texas. The case is still pending, and last month Tesla granted Musk 96 million shares worth about $30 billion as a "good faith" interim payment. That increased his ownership stake from 13% to 16%. That interim payment will be canceled if the 2018 package is reinstated, which would increase Musk's stake to around 20%, the FT explains.

If the entire 2025 package is activated and Tesla wins an appeal in Delaware, Musk's control would rise to 32%. However, after taxes and dilution, it would still amount to about 25% of the voting power, a source familiar with the shareholder structure told the Financial Times.

Elon Musk's fortune is estimated at $436.8 billion, according to Forbes Real-Time, which is updated in real time. Musk's assets include his stake in Tesla and private companies SpaceX (space), xAI (AI startup), Neuralink (development of neural interfaces) and The Boring Company (underground transportation tunnels project).

This article was AI-translated and verified by a human editor