 "A-3D printed miniature model of Elon Musk's face and Tesla logo are seen in this illustration created on July 23, 2025. File Image/Reuters")
Tesla has unveiled a historic and controversial $1 trillion compensation proposal for CEO Elon Musk, aiming to secure his leadership and focus on the company’s ambitious shift toward robotics and artificial intelligence (AI).
The plan comes amidst slowing electric vehicle (EV) sales and shareholder unrest.
At the same time, Musk himself has demonstrated renewed confidence in Tesla’s future by personally acquiring nearly $1 billion worth of Tesla shares, marking his first open-market purchase in over four years.
Musk’s first stock purchase since 2020
Last week, Elon Musk purchased 2.57 million Tesla shares at prices ranging between $372.37 and $396.54 per share, according to a filing released the following Monday.
This was Musk’s first open-market stock purchase since early 2020 and amounted to an investment of about $1 billion.
The announcement drove a 6 per cent surge in Tesla’s share price in early trading on Monday, extending a three-session rally for the stock.
Market observers saw the move as a deliberate statement by Musk, signalling that he remains fully invested in Tesla’s long-term vision despite recent turbulence.
Matt Britzman, senior equity analyst at Hargreaves Lansdown, described the purchase as “the clearest signal yet that (Musk is) slamming the accelerator on being all in again … the Tesla-Musk narrative looks firmly back on track after a shaky start to the year.”
Despite the short-term boost, Tesla’s performance in 2025 has been lacklustre.
By the end of last week, its stock had dropped by 2 per cent since the start of the year, making it one of the weakest performers in the so-called “Magnificent 7” group of major tech companies.
Tesla’s latest quarterly results revealed the underlying challenges: shrinking profit margins caused by softer global EV demand, higher production costs, and intensifying competition from established automakers and fast-growing Chinese companies.
The trillion-dollar compensation plan for Musk
The centrepiece of Tesla’s strategy to secure Musk’s focus is a compensation package worth up to $1 trillion, the largest ever proposed for a corporate executive.
Announced through a regulatory filing earlier this month, the plan is designed to tie Musk’s financial rewards directly to unprecedented performance milestones.
Tesla’s board has outlined several extraordinary targets that must be met for Musk to receive the full payout:
Deployment of one million autonomous Tesla taxis worldwide.
Deployment of one million humanoid robots, envisioned as personal assistants and industrial workers.
Expansion of annual profits to more than 24 times last year’s level.
Increase in Tesla’s market capitalisation to $8.5 trillion, up from about $1 trillion today.
If achieved, these milestones would grant Musk shares equivalent to 12 per cent of Tesla’s total equity, boosting his influence and bringing him closer to his stated goal of holding 25 per cent voting power in the company.
Currently, Musk owns about 13 per cent of Tesla, according to data from LSEG as of December 2024.
He has publicly stated that he would prefer to develop AI and robotics technologies outside Tesla if he cannot secure this level of voting control within the company.
Robyn Denholm, chair of Tesla’s board, defended the proposal in an interview with The New York Times.
“Putting together any compensation plan, you need to look at what motivates the individual that you’re trying to motivate,” she said. “And for Elon, it’s doing things that no one else has done before.”
Denholm framed the package as a “performance plan” rather than a reward for past achievements, stressing that Musk would receive nothing unless the company reached its ambitious goals.
“This plan is about future performance. It’s not about past performance. He gets nothing if he doesn’t perform against the goals,” she explained.
The shareholder vote on the package will take place at Tesla’s annual meeting in November.
How Musk’s payout plan has raised concerns
The scale of the proposed payout has prompted strong reactions from investors and pension fund managers. Some argue that Tesla’s current financial struggles and Musk’s divisive public image make such a plan inappropriate.
“Offering Elon Musk — the richest man in the world — a trillion-dollar pay package to convince him to remain CEO at a company he has already badly damaged is unconscionable,” stated Laura Montoya, the New Mexico state treasurer.
New Mexico and several other states hold Tesla shares within their employee pension funds, giving them a direct stake in the outcome of the vote.
Critics also point to recent setbacks under Musk’s leadership. Tesla’s once dominant EV position is now being challenged by Chinese manufacturers such as BYD and Geely, with Volkswagen also poised to overtake Tesla in global rankings.
Meanwhile, Tesla’s Cybertruck, one of Musk’s high-profile pet projects, has underperformed commercially and received disappointing reviews.
Denholm insists that Tesla remains deeply committed to its vehicle business while simultaneously expanding into robotics and energy storage.
“There is still a lot of ambition in the vehicle space,” she said, though she declined to provide details about upcoming products.
The special committee that developed the compensation plan included Denholm and Kathleen Wilson-Thompson, a former executive at Walgreens Boots Alliance. Other board members include long-time associates of Musk and his brother, Kimbal Musk.
Denholm rejected suggestions that the board is controlled by Musk, stating, “The board is a great board, very active, very independent, and I think the outside world doesn’t appreciate it.”
The plan was shaped under the shadow of a Delaware court ruling, which concluded earlier this year that Musk had heavily influenced the terms of his 2018 compensation deal.
That previous plan was already one of the largest in corporate history and helped Musk become the world’s richest individual.
Tesla is currently appealing the ruling.
During the negotiation process for the new plan, Denholm and Wilson-Thompson met with Musk ten times.
Musk repeatedly warned that he might devote his time and resources to other ventures if his request for greater ownership was not met.
Denholm declined to specify what compromises were reached but insisted there was genuine back-and-forth discussion.
How Musk’s political activities impacted Tesla
In recent months, Musk has spent extended periods in Washington, DC, working closely with United States President Donald Trump and expressing outspoken support for right-wing politicians worldwide.
Some Tesla customers, particularly those with liberal political leanings, have responded by selling their vehicles in protest.
Despite this, Denholm confirmed that the board has placed no restrictions on Musk’s political involvement.
“There’s no restriction on his free speech or his political views,” she told The New York Times.
She also explained that Musk’s limited travel during his work with the Trump administration was a board decision made for security reasons.
“I’m not concerned about him not spending enough time or energy at Tesla,” Denholm added, “and I never have been.”
For Musk, the most critical element of the compensation plan is not the financial reward itself but control over Tesla’s future direction.
Denholm highlighted this point, stating: “It’s actually about the voting influence in the company for the next generation of growth that he sees. I think it’s a little bit weird talking about the dollars when it’s actually the voting influence.”
How Musk provoked the ire of Pope Leo
Pope Leo — the first US-born pope, elected in May — also weighed in during excerpts of his first media interview, published by Catholic news site Crux on Sunday.
“CEOs that 60 years ago might have been making four to six times more than what the workers are receiving … 600 times more (now),” Pope Leo said, referencing the growing income disparity between corporate executives and their employees.
Addressing Tesla directly, he added, “Yesterday (there was) the news that Elon Musk is going to be the first trillionaire in the world. What does that mean and what’s that about? If that is the only thing that has value anymore, then we’re in big trouble.”
With inputs from agencies