The Hindu: Published on 10th Oct 2025.
Why in News?
Elon Musk has been offered the largest executive pay package in corporate history by Tesla’s board — worth $878 billion over ten years.
While the board claimed that he would have to achieve “Mars-shot milestones” to earn this, a Reuters investigation found that Musk could still make tens of billions of dollars even if he misses most of those ambitious goals.
Background:
The Tesla board proposed this massive pay plan in September 2025.
It linked Musk’s compensation to transforming Tesla and society through robotics, autonomous driving, and massive stock growth.
The plan stated that Musk would receive nothing unless these “incredibly ambitious” goals were achieved.
Key Findings:
Reuters analysis and experts revealed that Musk could earn more than $50 billion by hitting only a few easy targets.
Even achieving just two simple goals, combined with modest stock growth, could give him $26 billion.
Some product goals are vague, such as:
10 million “Full Self-Driving” (FSD) software subscriptions, without any requirement of being fully autonomous.
“1 million robots” goal, which doesn’t specify “humanoid,” making it open to interpretation.
Core Issues:
Ambiguity in Performance Targets:
Terms like “advanced driving system” are undefined, giving Tesla flexibility in interpretation.
Corporate Governance Risk:
Tesla’s board appears overly dependent on Musk, effectively giving him a monopoly on leadership.
Profit vs. Valuation Goals:
Musk can receive payouts based on market valuation increases even if profits don’t rise.
The structure favors stock performance over real profitability.
Investor Concerns:
Investors fear Musk’s attention could drift toward other ventures like X, SpaceX, or Neuralink.
Expert Opinions:
Matthew Wansley (Law Professor): “If I were Musk’s lawyer, I would love these definitions.”
Christian Rokseth (AI Analyst): “The goals are extremely vague; investors expect humanoid robots.”
Wei Jiang (Corporate Governance Expert): “Relying solely on one leader poses a governance risk.”
Gene Munster (Tesla Investor): “If investors sense something unfair, Musk could face backlash.”
Financial Implications:
Achieving easier goals could earn Musk $26–54 billion.
Toughest targets require Tesla to reach $50–400 billion in EBITDA, compared to $16.6 billion in 2024.
Tesla’s market value could reach $2 trillion even with a modest 6.4% annual stock growth.
Broader Impact:
- Corporate Ethics Debate: Raises global discussion on fairness and accountability in CEO pay structures.
- Investor Confidence: May shake investor trust if Tesla’s leadership appears self-serving.
- Market Precedent: Could influence future executive pay designs in tech and EV industries.
