Didn't Tesla Approve a Trillion Dollar Pay Package for Elon Musk?
In order for Elon Musk to receive his 1 trillion dollars, there are conditions that he needs to meet. And Tesla is being really demanding. Elon Musk would have to hit three different kind of targets, first: profit, second: operational milestones, and third: market cap. Elon Musk would need to increase Tesla's ebitda profit from around 13 billion this year to 400 billion within 10 years, then Elon Musk would need to deliver 20 million vehicles, have 1 million robotaxis in operation, and sell 1 million optimus robots, for context, Tesla launched 1.8 million vehicles in total in 2024 and robotaxis and optimus robots are not released yet. But the toughest demand is regarding Tesla market cap, because Elon Musk would have to also 6x Tesla's market cap from around 1.4 Trillion today to around 8.5 Trillion, on top of all the other targets, to get his full pay package.
I think this pay package reflects how important Elon Musk is to Tesla and its stock prices. Tesla, with a P/E ratio of 298, is not worth 1.4 trillion dollars, and it is only priced at that valuation because of Elon Musk. This is also an oppurtunity for Elon Musk to get Tesla to invest in xAI, the company that acquired X, or Twitter, for 33 Billion dollars compared to Elon Musk's original Twitter purchase price of 45 Billion dollars. Tesla investing in xAI is a good oppurtunity for Elon Musk to offload his losses to Tesla's investors.
The Pay Package is Actually Fair
Because the targets that Elon Musk has to meet are so impossible, if Elon Musk can actually 6x Tesla's stock price when their P/E ratio today is 298, then that would actually be impressive and since he created about 7 trillion dollars worth of value, a 1 trillion dollar pay package only seems fair. But the targets are just so incredibly impossible that it is never going to happen.
During the board meeting, Tesla claims that they are offering this pay package to Elon Musk as a way to "secure his commitment" to Tesla and make him pay his full attention to the company, instead of him having to split his attention between 5 different companies while also being involved in politics. It shows Tesla is really worried about losing Elon Musk because without him, Tesla's valuation cannot be justified.
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