Tesla’s $1 Trillion Musk Pay Bombshell: Board Backs CEO Amid Sales Slump and Market Share Woes!ng1

Tesla is going through a turbulent time. Sales are down, global market share is shrinking, and the launch of the Cybertruck has become the subject of ridicule, with just over 4,000 units sold in the second quarter, down more than 50% compared to the same period last year. In that context, the company’s board of directors still approved an unprecedented pay package for CEO Elon Musk , with a maximum value of up to $ 1,000 billion if the set goals are completed.

According to a proxy filing sent to shareholders, the package will be put to a vote on November 6. Tesla describes it as a unique deal, tied to its mission to “transform Tesla into an AI and robotics company beyond just selling cars.”

The company stressed that Musk was asked to create groundbreaking technologies to “improve society as a whole”, and asserted that no other company had ever offered such a challenging performance-based reward system.

Protection from the board of directors

Tesla Chairwoman Robyn Denholm publicly defended the pay package, arguing it was the only way to keep Elon Musk focused on the company for the next decade.

However, when reading more closely the goals that Musk needs to achieve, many experts say that they are not as “hard” as Tesla claims. TechCrunch commented that most of the real conditions are designed to be easily overcome. For example, the goal of delivering a total of 20 million vehicles by 2035 is almost obvious.

The electric car company has sold about 8 million cars, delivering nearly 2 million a year, meaning it could be done in less than a decade at its current pace, a far cry from what Tesla has described as a “grand challenge.”

The goal of deploying 1 million robotaxis is also controversial. The South African-born billionaire promised in 2019 that Tesla would have 1 million self-driving cars within a year, but so far the company has only tested a few dozen prototypes in Texas and still requires a driver in the cabin.

However, the definition of the incentive package is very loose, requiring only that the car be equipped with FSD software and operate the paid service for a period of 3 months. This paves the way for Tesla to easily “qualify” without having to deploy it on a large scale.

Similarly, the goal of reaching 10 million FSD software subscribers is also considered unrealistic. Tesla has changed its marketing from “full self-driving” to “FSD (supervised),” meaning the cars still require regular driver intervention. There is no stipulation in the agreement that the subscription price must remain the same, meaning Tesla could easily reduce the fee to a very low level to reach the target.

As for the plan to put 1 million Optimus robots into use, experts say this is a “paper” goal. Tesla has not proven its ability to compete in the field of industrial robots, but the salary package defines robots broadly, even allowing Elon Musk’s other companies to buy products to meet the target.

Disappointing business results

While the board has praised Musk and said his compensation package will spur him to greater achievements, Tesla’s financial performance has been lackluster. Electric vehicle sales have declined despite efforts to cut prices. Both Tesla’s profits and revenue have fallen short of expectations. The stock is down about 2% since the start of the year, while the S&P 500 has gained 12%.

The stock surged after Musk spent $1 billion to buy more shares, but is still down nearly 13% from its peak late last year. With such a track record, analysts say an independent board should consider looking for a new CEO rather than continuing to “bet” on the old leadership.

The problem is that Tesla’s board of directors is not considered independent. Its members include Elon’s younger brother, Kimbal Musk; James Murdoch; Ira Ehrenpreis; and JB Straubel, longtime close associates of the billionaire. Although the Musk brothers withdrew from voting, the remaining members voted unanimously, suggesting that the final result likely reflects the Tesla CEO’s wishes.

The financial goals, while seemingly huge, are not impossible. The compensation package calls for Tesla to achieve pre-tax profits of $400 billion a year and a market capitalization of $8.5 trillion , many times higher than its current value. But Musk could easily find a shortcut by merging other companies he controls, such as xAI or SpaceX, to increase the combined profits.

More importantly, he doesn’t have to hit all of the targets to get the bonus. The deal is divided into 12 stock tranches, and Musk could start collecting tens of billions of dollars as soon as profits surpass $50 billion combined with a secondary target.