Musk to Become America's First 'Trillionaire' CEO?…Unprecedented Tesla Compensation Plan Revealed

Unprecedented $1 trillion scale

Condition to increase market cap eightfold

A new Tesla compensation plan that would grant Tesla CEO Elon Musk, already the world's richest person, up to $1 trillion (about 1,400 trillion won) in shares has been disclosed. If the plan materializes, Musk would become the first 'trillionaire' CEO in U.S. history.

On the 6th (local time), according to industry sources, Tesla's board disclosed the proposed performance-based compensation to be awarded to CEO Musk in a proxy filing submitted to securities regulators the previous day. The proposal will be voted on at Tesla's annual shareholders' meeting on November 6.

The plan would grant Musk about 420 million shares, equivalent to 12% of Tesla's total common stock (adjusted), in 12 tranches over 10 years through 2035. Tesla's filing did not specify a value, but U.S. media predict that if Musk meets all the stock-price and performance targets and receives all the shares, the total value would be around $1 trillion.

U.S. media noted that Musk could, for the first time in U.S. history, surpass billionaire status and become a 'trillionaire' CEO. If the plan were executed, the amount Tesla would report on its financial statements this year as CEO compensation would be enormous. Tesla's board said that, under accounting rules, the new stock compensation cost (preliminary aggregate fair value estimate) would amount to about $88 billion.

Courtney Yu, head of research at Equilar, an executive compensation analytics firm, said, "Combined with the more than $20 billion in stock awards announced last August, Tesla could report Musk's total 2025 compensation at about $114 billion (about 158.4 trillion won)," adding, "This would be the largest compensation package ever."

This is dozens of times larger than Tesla's 2018 Musk compensation package (accounting value at the time $2.3 billion), which was voided by a court ruling and is currently the subject of litigation. The Wall Street Journal reported that, among non-Tesla companies, the largest prior CEO compensation case (third-largest ever) was Blackstone's long-time CEO Stephen Schwarzman, who received $1.4 billion (about 1.9 trillion won) in 2008.

U.S. media predicted that Tesla's proposal is structured with conditions that would significantly lift Tesla's stock price and be popular with shareholders. For Musk to receive the awards, he must first achieve a Tesla market capitalization of $2 trillion, then exceed stage-by-stage targets and ultimately reach a market cap of $8.5 trillion. That would require increasing Tesla's current market cap ($1.1 trillion) by more than eightfold within 10 years.

Musk must remain at Tesla for at least seven and a half years to cash in part of the shares he receives in stages, and more than 10 years to receive all the shares. While Musk would be unable to sell the shares for several years after acquisition, he can exercise voting rights immediately at shareholder meetings, potentially strengthening his control over the company. U.S. media reported that Musk's stake could rise from the current 13% to as much as 29% with future award share acquisitions.

In a post on X (formerly Twitter) last January, Musk wrote, "I am uncomfortable growing Tesla into a leader in AI and robotics without 25% voting power (ownership)," and said he might leave Tesla if he does not obtain that level of stake.

Subin Park, Hankyung.com reporter waterbean@hankyung.com