Elon Musk in line for trillion-dollar pay package if Tesla hits 10-year goals

The world’s richest man could become its first trillionaire if Elon Musk hits a series of aggressive targets for his electric car company over the next decade, according to a proposed pay package released by the company.

Tesla said in a regulatory filing on Friday that it will hand Mr Musk shares worth as much as 12% of the company in a dozen separate packages if the company meets certain performance targets, including massive increases in car production, share price and operating profit.

If approved by shareholders, the new pay package could make Mr Musk the world’s first trillion-dollar executive, and would mark a new level of outsized pay. But the payoff is in shares, not cash, and the goals are extreme.

Mr Musk overcame doubters to turn Tesla into the world’s most valuable car company, but he could face even steeper odds in hitting the targets set by the company’s compensation committee — not least because of Tesla’s main business of making electric vehicles is currently in a slump, in part because of Mr Musk’s foray into right-wing politics.

“It doesn’t matter how much money he gets. He can’t help himself,” said Telemetry analyst Sam Abuelsamid who follows Tesla stock, which is down 25% this year. “And the more he talks, the more he turns off potential customers.”

To get his first package of shares equivalent to 1% of the company, Mr Musk would have to convince investors in the stock market that Tesla is worth two trillion dollars (£1.48 trillion) in total, double what they value it today, and also hit several other milestones.

To receive all the shares offered and make him the world’s first trillion-dollar man would require that market value to then rise to 8.5 trillion dollars (£6.3 trillion), double that of the world’s most valuable company now, chipmaker Nvidia.

Among other goals, sales of all Tesla vehicles would eventually also have to reach 20 million, nearly triple its entire sales since it was founded more than two decades ago.

Mr Musk would also have to vastly expand Tesla’s robot and robotaxi businesses by selling a million of the bots and a million of the driverless cabs, the latter a business that has only begun to roll out its taxi service and is behind rivals, such as Waymo.

Mr Musk would also need to remain with Tesla for at least seven and a half years to cash out on any stock, and 10 years to earn the full amount.

Mr Musk has been one of the richest people in the world for several years.

He would also receive more voting power over Tesla under the proposed plan.

The EV company is set to hold its annual shareholders meeting on November 6, where investors will vote on the new pay package.

Tesla’s last shareholders meeting was on June 13 of last year, where investors voted to restore Mr Musk’s record 44.9 billion-dollar (£33.3 billion) pay package that was thrown out by a Delaware judge earlier that year.

Late last year the package was revoked for a second time. Tesla has appealed against the ruling.

A condition of the 11th and 12th tranches of the plan includes Mr Musk coming up with a framework for someone to succeed him as chief executive.

The plunge in Tesla sales this year was largely thanks to criticism over Mr Musk’s affiliation with US President Donald Trump. Tesla also faces intensifying competition from the big Detroit carmakers and particularly from China.

Tesla sales have fallen precipitously in Europe after Mr Musk aligned with a far-right political party in German.

Sales plunged 40% in July in the 27 European Union countries compared with the year earlier even as sales overall of electric vehicle soared, according to the European Automobile Manufacturers’ Association.

Meanwhile, sales of Chinese rival BYD continued to climb fast, grabbing 1.1% market share of all car sales in the month versus Tesla’s 0.7%.

In its most recent quarter, Tesla reported that quarterly profits plunged from 1.39 billion dollars (£1.03 billion) to 409 million dollars (£303 million). Revenue also fell and the company fell short of even the lowered expectations on Wall Street.

Investors have grown increasingly worried about the trajectory of the company after Mr Musk had spent so much time in Washington this year, becoming one of the most prominent officials in the Trump administration in its bid to slash the size of the US government.

Last month, Tesla said it gave Mr Musk a stock grant of 29 billion dollars (£21.5 billion) as a reward for years of “transformative and unprecedented” growth despite a recent foray into right-wing politics that has hurt its sales, profits and its stock price.

Tesla said at the time that the grant was a “first step, good faith” way of retaining Mr Musk and keeping him focused, citing his leadership of SpaceX, xAI and other companies.

Mr Musk said recently that he needed more shares and control so he couldn’t be ousted by shareholder activists.

Tesla’s stock rose 2.5% in midday trading.