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Tesla's $1tn, 10-year pay package to retain CEO Elon Musk is likely to be approved by shareholders at the company's annual meeting in November even though the amount is staggering.That is because it was crafted with an eye on keeping Musk in place, addressing concerns about the company's technical outlook and giving big company owners just enough reason to back the massive amount, investors and executive pay analysts said.Earlier on Friday, the automaker's board approved what it called "A Super Ambitious Incentive Package for a Pioneering, Ambitious and Unique CEO" that sets out lofty earnings and valuation targets awarding Musk millions of shares over the next decade if he hits them. It immediately gives Musk 96mn shares of restricted stock worth more than $31bn as of intraday trading on Friday that vests over the next two years, as well as more control over the company. His total 2025 compensation package is worth north of $113bn, executive compensation research firm Equilar has estimated."The pay package, which makes a big bet on the future of robots, may see shareholder support," said Taufiq Rahim, a SpaceX investor and principal at 2040 Advisory. "But it raises larger social questions about the outsized gains going to relatively few capital holders, which is likely not sustainable and will face public pressures.”The package is designed to keep Musk from leaving and is squarely focused on transforming Tesla into an artificial-intelligence and robotics powerhouse, the board said in a securities filing. It said Musk is the only person on the planet who can unlock Tesla's full potential.The compensation committee started negotiating Musk's pay package in February, it said, meeting with lawyers 37 times and directly with Musk 10 times over seven months. Certain items were non-negotiable for the idiosyncratic CEO: he wanted 25% of the company, to control Tesla's future direction and to be fully compensated for a 2018 pay package that was hung up in litigation.Musk threatened to leave more than once, and the board worried the company's AI talent would follow him out the door, it said in the filing.The $31bn in restricted shares, which he cannot sell for at least five years, is partial payback for a $56bn 2018 pay plan that a Delaware court voided last year. If Musk wins in court within a certain time frame, he will not receive the one-time payment "so there can be no 'double dip,'" the board said."Musk also raised the possibility that he may pursue his other interests and leave Tesla if he did not receive such assurance," the board said.The pay plan is by far the largest ever for any CEO, Equilar said. And while it is likely to face legal challenges, compensation experts see it winning shareholder approval."Time and time again, Tesla's shareholders have approved these grants over the years," Equilar Research Director Courtney Yu told Reuters. "While it may seem outlandish now, shareholders will get tremendous value out of it if Elon Musk is successful."None of Tesla's three largest outside investors, Vanguard Group, BlackRock or State Street, immediately said on Friday how they would vote. Among them, Vanguard and BlackRock supported Musk's $56bn pay package last year, disclosures show, while State Street funds voted against it.Tesla and top funds can still expect pressure over the pay, however, with a number of union figures and public-sector treasurers voicing concern."We urge shareholders to reject Musk’s money grab, take away the Tesla board’s rubber stamp, and restore basic corporate governance standards," said Randi Weingarten, president of the American Federation of Teachers, in a statement.Musk, who currently controls close to 13% of the company, would own 25% if the plan is approved, so long as he hits his performance targets and sticks around for at least seven more years. Payable over 12 tranches after hitting certain milestones, the ultimate prize could make Tesla the most valuable company in the world with an aspirational market capitalisation of $8.5tn, making it worth more than Microsoft, Meta Platforms and Alphabet combined, today, the board noted.Kristin Hull, founder and chief investment officer of Tesla investor Nia Impact Capital, called the package irresponsible. "This is investor money that could go into R&D or acquisitions, places that would really benefit Tesla in the long term," she said, adding that she is considering a challenge with other shareholders.Dan Coatsworth, investment analyst at AJ Bell, called Musk a visionary but said the pay plan was excessive and could set a bad precedent in corporate governance. He questioned whether Musk was worth that much."He also presides over a company that has lost its edge, is being overtaken by rivals, and whose brand has been tarnished by Musk’s actions outside of Tesla," he said.Tesla’s shares closed up 3.6% at $350.84 on Friday. They are down 13% for 2025, although they have recovered from their lows. Investors worry about its deteriorating electric vehicle business and rising foreign competition."One minute Tesla’s board is wondering if Elon Musk is a liability to the company given his outspoken views and political distractions, the next they’re effectively saying ‘pick a number, any number’ to lock him in for as long as possible," Coatsworth said."Surely Musk should be fighting for his job, not Tesla’s board fighting to keep him?"

Plan highlights Tesla's reliance on Musk amid slowing EV demandAward could boost Musk's stake further if targets metTargets include company hitting market value of $8.6tn in 10 yearsTesla's board has proposed a $1tn compensation plan for CEO Elon Musk in what would be the largest corporate pay package in history, underscoring the hold Musk has over the carmaker as it attempts to transform into an AI and robotics powerhouse.The world's richest person has consistently asked for a bigger stake in the company to gain more control, even as a legal battle over his 2018 pay package — then valued at a mere $56bn — continues. The newly proposed award is roughly 18 times the size of the contested plan and is close to the company's current market valuation.The plan highlights Tesla's reliance on Musk as it faces slowing EV demand, rising competition from Chinese rivals and pressure to deliver on its AI ambitions."While bold compensation tied to performance is nothing new, the sheer scale here sets a new bar for CEO incentives and will dominate boardroom debates everywhere," said Adam Sarhan, chief executive of 50 Park Investments in New York.The regulatory filing puts Musk on a different plane than other technology executives, saying that "traditional compensation packages granted to executives at other companies were determined to not be appropriate for designing Mr. Musk’s incentive compensation."Musk transformed Tesla from a niche EV startup into the world's most valuable automaker, scaling production, expanding globally and pushing the industry toward electric mobility.Recently, however, Tesla has been losing ground to Chinese rival BYD and other automakers amid softening EV demand and intensifying competition in key markets.Supporters of Musk's outsized pay package proposals have argued that his compensation plans have aligned his incentives with long-term growth, while critics have warned of potential dilution and governance risks."This is a ridiculously large pay package. It raises lots of questions, but last year Musk moved Tesla from Delaware to Texas in order to avoid all those questions," said Brian Quinn, professor at Boston College Law School. "Given that Tesla's stock price is basically all vibes and appears to have very little to do with the automaker's actual performance, I suspect they will approve this package."The board said the new award could lift his stake significantly if all targets were met, giving him even greater control as Tesla seeks to become the world's most valuable company.The proposed plan would grant Musk up to 12% of Tesla's stock, worth about $1.03tn if the company hits its target market value of $8.6tn. The plan requires boosting Tesla's valuation nearly eightfold, or about $7.5tn, over the next decade.If fully earned, the award would materially increase Musk's voting power from his roughly 13% stake, intensifying debate over governance and succession.The board said the award would vest in tranches tied to both market capitalisation and operational milestones such as mass production of robotaxis and humanoid robots.Tesla emphasised that Musk would receive no salary or cash bonus, with all compensation linked to performance, echoing the structure of his 2018 plan.The company's shares were up about 4% in early trading.Tesla's board earlier this year approved an interim compensation package for CEO Elon Musk worth about $29bn in restricted stock, designed to keep him at the helm through at least 2030 as the company pivots to an AI-first strategy.Tesla has since reincorporated in Texas and is appealing the Delaware ruling, but the company said the new plan reflects shareholder feedback and stronger governance safeguards.The filing also disclosed that a special committee of independent directors reviewed the proposal, which will go to a shareholder vote in November.Musk's foray into party politics and his willingness to challenge President Donald Trump have heightened concerns among Tesla investors about potential distractions from the company’s core business.In July, Elon Musk announced plans to launch a third political party, the "America Party," following a public clash with Trump over a tax cut and government spending bill.Trump dismissed the idea as "ridiculous," warning that a third party would create chaos. Since then, Musk appears to have slowed the initiative, underscoring his unpredictable approach to politics.Governance experts have said these moves reinforce long-standing worries about Musk's unpredictability and the concentration of power in his hands.Tesla's board has urged shareholders to vote against a proposal calling for a political neutrality policy, which would have expanded board oversight of Musk's political activities.Tesla shares hit a record high late last year after Trump returned to the Oval Office, as investors anticipated regulatory easing that could accelerate the rollout of robotaxis. However, the stock has since retreated from those highs amid Musk's political spat with the president.