Even hitting just two of the easiest targets, along with modest stock growth, would net Musk $26 billion, more than the lifetime pay of the next eight best-paid CEOs combined, a group that includes Meta Platforms' Mark Zuckerberg, Oracle co-founder Larry Ellison, Apple's Tim Cook, and Nvidia's Jensen Huang, according to an analysis for Reuters by research firm Equilar.
Tesla’s board has just rolled out the largest executive compensation package in corporate history for CEO Elon Musk. The headline figure is a staggering $878 billion in Tesla stock over 10 years, an amount the board claims is tied to achieving “Mars-shot milestones” that will “completely transform Tesla and society as we know it.”
The message to investors was clear: if Musk doesn’t achieve these incredibly ambitious goals in robotics, autonomous driving, and profit, he gets “zero.”
However, a closer look at the fine print, based on a recent Reuters analysis, suggests a different story. It appears Musk could walk away with tens of billions of dollars without ever launching his “Mars-shot.” Let’s break down the details.
The “Easy Wins” Hiding in the Fine Print
While some goals are incredibly tough, several key targets appear surprisingly achievable, providing a path to massive payouts without necessarily revolutionizing the company.
- Modest Vehicle Sales: One of the most straightforward goals involves vehicle sales. Musk can earn $8.2 billion in stock by averaging just 1.2 million car sales annually over the next decade, provided Tesla’s market value grows from its current $1.4 trillion to $2 trillion by 2035. For context, Tesla sold more than that in 2024 alone (1.7 million). This goal seems less like a stretch and more like a baseline.
- Vaguely Worded Tech Goals: The revolutionary goals in self-driving and robotics are written with language that leaves significant room for interpretation.
- Full Self-Driving (FSD): One goal requires 10 million FSD subscriptions. However, the contract doesn’t mandate that the software be fully autonomous. It only requires an “advanced driving system,” a term with no clear industry definition. Experts point out this target could potentially be met simply by dropping the price of the existing, non-autonomous software.
- Robotaxis: Another milestone calls for one million robotaxis in operation “without a human driver in the vehicle.” While this sounds specific, experts note it could be interpreted to allow for remote human operators, a system Tesla is already testing.
- Robots: The deal sets a target of one million “bots.” While investors are picturing the humanoid Optimus robot, the contract defines a bot as “any robot or other physical product with mobility using artificial intelligence.” This “totally vague formulation,” as one analyst called it, could be satisfied by far simpler machines.
The Payouts: Billions Without a Breakthrough
The structure of the compensation plan is what makes these easier goals so lucrative. Each operational milestone, when paired with a market valuation milestone, unlocks a tranche of stock.
The numbers are staggering. By hitting just two of the easier product goals and seeing Tesla’s valuation reach $2.5 trillion, Musk would net $26.4 billion. To put that in perspective, that single payout is more than the combined lifetime earnings of the next eight highest-paid CEOs, including Mark Zuckerberg (Meta), Tim Cook (Apple), and Jensen Huang (Nvidia).
If he hits three targets and the company reaches a $3 trillion valuation, his payout swells to $54.6 billion. This means Musk could earn these historic sums without ever delivering a truly driverless car—the signature promise he has been making for a decade.
The Real Hurdle (That He Might Be Able to Sidestep)
Not all the goals are simple. The profit targets are undeniably challenging, requiring Tesla’s earnings to grow from $16.6 billion in 2024 to as high as $400 billion.
Here’s the catch: the plan’s structure doesn’t distinguish between the easy and hard goals. Musk receives the same 1% stock award for hitting the relatively simple vehicle sales target as he would for achieving a five-fold increase in profits. This design allows for massive compensation even if the company’s core profitability doesn’t meet the most ambitious targets.
A Board’s Unshakeable Faith vs. Governance Concerns
The Tesla board has staked its future entirely on one person, stating Musk is the only leader capable of achieving this transformation. They even noted that during negotiations, Musk raised the possibility of “prioritizing other ventures” if a deal couldn’t be reached.
Corporate governance experts see this as a huge risk, granting Musk a “monopoly” on the CEO position. Good governance, they argue, relies on a competitive market for leadership, not dependence on a single individual.
For his part, Musk claims the package isn’t about compensation but about securing enough influence to “ensure safety if we build millions of robots.”
What Does This Mean for Investors?
Ultimately, investors are left with a critical question. Is this pay package a necessary and brilliant incentive to keep a visionary CEO focused on world-changing goals? Or is it a deal with loopholes big enough to drive a Cybertruck through, rewarding massive payouts for relatively modest achievements?
While shareholders have focused on the biggest payouts tied to the hardest goals, the path to a multi-billion-dollar reward may be far shorter and simpler than advertised. For Musk to truly earn the “Mars-shot” payday, as one analyst put it, “we’re going to start having to see real products.” Time will tell if the spirit of the deal, or just the letter of it, is fulfilled.
