Elon Musk might become the first trillionaire in history if Tesla offers him a compensation package

Elon Musk, already the world’s richest person, could become the first trillionaire after the Tesla board unveiled a massive new pay package for its CEO to keep his focus on the troubled EV maker.

If Tesla is able to develop much above its current worth and reach a market size that no other company has ever approached, the package would grant him more shares of Tesla stock. Musk’s prior compensation deal, which further increased his enormous wealth, likewise included aggressive growth targets that at first seemed unattainable but that Tesla was able to easily accomplish.

Musk may receive 423.7 million more shares of Tesla stock as part of the new compensation plan. At the current stock price, the shares would be worth $143.5 billion.

However, Musk would only receive those shares if Tesla’s stock price rose sharply over the next several years. The company stock would need to reach an overall value of $8.5 trillion for Musk to get all the shares, significantly above the current market capitalization of $1.1 trillion and roughly double the current market value of Nvidia (NVDA), the current most-valuable company on the market.

A proposal from shareholders for Tesla to acquire stock in privately held xAI, the artificial intelligence firm that Musk also owns, was included in the company’s proxy statement outlining Musk’s payment plan. Elon Musk could be able to further solidify his expanding commercial empire with that assistance.

The social media site X, which was once known as Twitter and which Musk acquired for $44 billion of his own funds in 2022, was just acquired by XAI. The business did not express support or opposition to the shareholder proposal, which omits information about the size and price of Tesla’s appropriate holding in xAI.

At Thursday’s closing price, Musk’s current holdings of 410 million Tesla shares are valued at $139 billion. Using Bloomberg’s billionaire tracker, that share, coupled with his holdings in xAI, the rocket company SpaceX, and a number of other businesses he founded and currently manages, has made him the world’s richest person, valued at $378 billion.

He presently has options to purchase an additional 304 million Tesla shares, but the 2018 compensation package that gave him those options was twice declared unlawful by a Delaware judge. Those decisions were made twice in spite of the resounding support of Tesla stockholders. Musk currently owns 18% of the business’s shares after the corporation attempted to give him those options once more this year.

Between election day until mid-December 2024, investors bet that his tight relationship with President Donald Trump would help Tesla, and the company’s shares almost doubled in value, reaching a record high price. However, Tesla’s stock lost those gains as a result of demonstrations, declining sales, and declining earnings in response to those linkages (prior to his falling out with Trump). Although some of those losses have been recovered, the shares are still 26% below their peak in December.

Nevertheless, Musk and his Wall Street supporters have maintained that the business is in a strong position to become much bigger and more prosperous in the future. He has persisted in his forecast that his ideas for self-driving cars, such as a robotaxi service, will generate enormous profits and value for investors. In addition to giving customers rides, the robotaxis would enable Tesla owners to rent out their vehicles for autonomous rides while not in use.

In addition, Musk has promised a range of humanoid robots that might surpass Tesla’s automobile sales.

Dan Ives, an analyst at Wedbush Securities, told CNN on Friday that although Musk is Tesla’s greatest asset, the company must retain him as CEO. One of the larger Tesla bulls on Wall Street is Ives.

“Musk will now drive its next leg of growth in this AI era,” Ives continued. “The Board had a $1 trillion dollar decision and made the right one.”

The significance of maintaining Musk’s concentration on Tesla moving forward was mentioned in the board’s proxy statement. Despite his rift with President Trump, he continues to be involved in politics in addition to his numerous business ventures. He has declared his intention to start a third political party.

In its proxy statement, Tesla cautioned that it needed to provide Musk with incentives to concentrate on expanding the business. It stated that Musk “also raised the possibility that he may pursue other interests that may afford him greater influence if he did not receive such assurances” during the pay package talks.

“Mr. Musk possesses the leadership qualities required to transform Tesla and realize its long-term mission at an unparalleled level,” the board stated.

However, up until now, all of those lofty goals have been empty claims made by a man and business that frequently fail to live up to their promises. Chinese EV manufacturers are becoming a bigger threat to Tesla. BYD, one of those Chinese automakers, is poised to pass Tesla for the most EV sales worldwide, even though it is not available for sale in the United States.

Additionally, Waymo, the autonomous car division of Google parent Alphabet, which offers its own service and has collaborated with Uber in some areas, is one of the companies that compete with Tesla in the market for robotaxi services.

Following the news, premarket trading saw a modest increase in Tesla (TSLA) shares.

This tale is still in progress and will be updated.