Elon Musk: The Future of Tesla and the Path to Becoming a Trillionaire

Elon Musk and Tesla's Goals

Elon Musk could lead Tesla to a valuation of 8 trillion USD within the next decade, paving his way to becoming the world's first trillionaire. However, for this to happen, shareholders need to approve the latest proposed compensation plan for Musk. This vote is to be held at the annual shareholders meeting taking place this Thursday in Austin, Texas.

As stated in Tesla’s annual proxy statement, if Musk meets all performance targets outlined under the 2025 CEO Performance Award, his leadership will ensure the company becomes the most valuable in history.

Additionally, besides forward-looking proposals related to Musk's 1 trillion USD compensation, shareholders will also evaluate the remaining 56 billion USD from the 2018 compensation plan as an alternative payment route. The company is also requesting shareholders to vote against several other shareholder proposals. The previous payment package was invalidated twice by the Delaware court, and an appeal is currently ongoing in a higher court, prompting Tesla to secure Musk's payments.

The 2025 compensation package includes targets beyond just increasing the company's market value. The required targets are divided into twelve "tranches," each defined by its growth targets. The first milestone requires the market value to reach 2 trillion USD. The subsequent nine targets each demand an additional 500 billion USD in growth, with the aim of reaching 8.5 trillion USD by 2035. In addition to each financial target, there are product development requirements.

Musk must sell 20 million Tesla electric vehicles, provide 10 million active autonomous driving subscriptions, produce 1 million humanoid robots, and roll out 1 million robo-taxis for commercial use to earn 12% of the company's shares over the next decade. Furthermore, he is expected to achieve 400 billion USD in actual earnings over quarters. By the third quarter of 2025, actual earnings were 4.2 billion USD, reflecting a 9% decline compared to the previous year.

In conclusion, Musk must increase Tesla’s market value from 1 trillion USD to 8.5 trillion USD. He must also maintain shareholder status for at least seven and a half years and assist in developing a long-term succession plan. As the company's value increases, so too will the value of the shares, thereby elevating his own wealth.

The company emphasized that the proposed targets would be a "remarkably challenging process for both Tesla and Musk." If these financial targets are achieved, Tesla will reach a value greater than the total of Meta, Microsoft, and Alphabet.

Some commentators suggest that even if Musk does not achieve all these goals, he could still make billions. Tesla's Chairperson Robyn Denholm noted that voting “no” on the 2025 compensation plan could risk losing Musk as CEO. Denholm pointed out that Musk had not received significant compensation over the past eight years due to legal battles over the 2018 compensation plan. In a note signed by Denholm and board member Kathleen Wilson-Thompson, it was emphasized that Musk's achievements during this agreement period contributed to Tesla's 735 billion USD rise in market value.

If the new compensation plan is granted alongside the 2018 package, Musk could own more than 25% of Tesla’s shares. As of November 5, Tesla shares are trading around 450 USD and are very close to their 52-week high.

On November 4, SEC records indicated that Musk and others planned to vote against the 1 trillion USD compensation package based on social media posts. However, within hours, the situation changed. Schwab stated, "We believe that supporting this proposal will align management with shareholder interests and provide the best outcome for all parties."

Meanwhile, Norges Bank Investment Management (Norway's sovereign wealth fund) and Tesla’s seventh-largest shareholder announced this week that they intended to vote against the proposed compensation package, stating, "We are concerned about the overall size of the award and believe the key person risk has not been mitigated."

Despite Musk's posts regarding the vote on his own '__X__' social media platform and the endorsements of current board members, at least three investment firms have committed to supporting the proposal.

As the largest individual shareholder of Tesla, owning over 500 million shares, Elon Musk technically has the right to vote in favor of his own compensation package. Lawrence Hamermesh, a retired professor at Widener University's Delaware Law School, noted, "It would be quite a sad commentary on accountability if a controlling shareholder could vote on their own compensation."

Tesla has aimed to motivate its CEO by offering compensation plans that grant stock options in exchange for meeting specific goals. However, the last compensation package set in 2018 was contested by a shareholder in the Delaware court and was ultimately deemed invalid. Musk has expressed his discomfort with the court rulings and has sought to move Tesla’s headquarters from Delaware to Texas. His vocal discontent with the Delaware court decisions has fueled a corporate trend known as #DExit, where other leading companies like Dropbox and Meta threaten to move their corporate offices out of Delaware.

Elon Musk is said to have significant pull, with influences extending to corporate law. Columbia Law School Professor Eric Talley stated that Delaware’s title as "the home of corporations" has gone largely unquestioned, at least until 2024, as Elon Musk has begun to act to challenge this status quo.