Tesla Approves $1 Trillion Salary Deal for Elon Musk Over 10 Years – What It Means for Investors in 2025
- Why Did Tesla Offer Elon Musk a $1 Trillion Deal?
- How Does the Compensation Package Work?
- Investor Reactions: Divided and Vocal
- Musk’s Ultimatum: Control or Walk Away
- Tesla’s Stock and the Road Ahead
- FAQ: Your Burning Questions Answered
Tesla's board has greenlit a staggering $1 trillion compensation package for CEO Elon Musk, tying his pay to ambitious performance milestones over the next decade. The deal, approved on September 7, 2025, grants Musk 96 million restricted shares upfront, valued at $31 billion, with a five-year vesting period. Critics call it excessive, while supporters argue it’s necessary to retain Musk’s leadership in AI and robotics. Here’s a DEEP dive into the details, investor reactions, and what this means for Tesla’s future.
Why Did Tesla Offer Elon Musk a $1 Trillion Deal?
Tesla’s board framed the package as a "super ambitious incentive plan for a pioneering, ambitious, and unique CEO." The deal, finalized after seven months of negotiations, aims to lock Musk into leading Tesla through its next phase—dominating AI and robotics. Musk reportedly threatened to leave if his demands weren’t met, including a 25% ownership stake and full control over Tesla’s management. The board feared losing both Musk and Tesla’s AI talent, justifying the unprecedented payout.
How Does the Compensation Package Work?
The $1 trillion deal is structured in 12 tranches, each tied to specific performance targets. Musk receives 96 million restricted shares upfront (worth $31 billion as of September 2025), but they’re locked for five years. If all goals are hit, his total compensation could surpass $113 billion by 2035, according to executive pay tracker Equilar. Notably, the package replaces Musk’s voided $56 billion 2018 plan, though the board clarified he won’t "double-dip" if he wins his legal challenge over the earlier deal.
Investor Reactions: Divided and Vocal
While some shareholders, like Vanguard and BlackRock (who backed Musk’s 2018 plan), remain silent, others are furious. Kristin Hull of Nia Impact Capital labeled the package "irresponsible," arguing funds should go toward R&D. Randi Weingarten of the American Federation of Teachers urged shareholders to reject it, calling for governance reforms. Analysts like AJ Bell’s Dan Coatsworth warn the deal risks corporate stability, noting Tesla’s slipping competitive edge and Musk’s polarizing public persona.
Musk’s Ultimatum: Control or Walk Away
Behind the scenes, Musk played hardball. The compensation committee met with lawyers 37 times and Musk himself 10 times. His non-negotiables: 25% ownership, full managerial authority, and repayment of the axed 2018 package. The board’s filings reveal Musk repeatedly threatened to quit, warning he might focus on other ventures (think SpaceX, Neuralink, or X) if his terms weren’t met. His current 13% stake could rise to 25% if Tesla hits $8.5 trillion in market cap—surpassing Microsoft, Meta, and Alphabet combined.
Tesla’s Stock and the Road Ahead
Despite a 3.6% bump post-announcement, Tesla shares are down 13% year-to-date in 2025, pressured by EV market struggles and global competition. The board insists Musk is the only person who can "unlock Tesla’s full potential," but critics like Coatsworth mock the paradox: "One minute, Tesla’s board wonders if Musk is a liability; the next, they’re begging him to name his price."
FAQ: Your Burning Questions Answered
How much is Elon Musk’s new Tesla package worth?
The total potential value exceeds $1 trillion over 10 years, with $31 billion in restricted shares granted upfront.
What happens if Musk loses his 2018 pay lawsuit?
This new package compensates for the voided $56 billion plan. If he wins the lawsuit, he forfeits the new shares to avoid "double-dipping."
Why are some investors opposing the deal?
Critics argue it’s excessive, undermines governance, and diverts funds from R&D. Others worry it entrenches Musk’s control despite Tesla’s challenges.
