Has Elon Musk really been awarded a $1 trillion pay deal? | Automotive Industry News

Tesla shares jumped 6 % on Monday after CEO Elon Musk disclosed that he had purchased $1bn value of the corporate’s inventory. The transfer reinforces Musk’s push for larger management over Tesla and comes per week after the corporate’s board provided him a $1 trillion pay package over the following decade.

Musk’s inventory buy – his first open-market buy-up of shares since 2020 – comes at a important time for Tesla, because it races to remodel into a synthetic intelligence and robotics agency while additionally grappling with falling gross sales of electrical automobiles (EVs).

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However Musk’s pay packet has are available for intense criticism. Final weekend, Pope Leo decried the widening pay hole between company bosses similar to Elon Musk – whose estimated wealth now stands at $367bn – and peculiar working individuals, which he mentioned was a significant factor in rising international unrest.

Why is Musk shopping for up Tesla shares?

On September 12, Musk, 54, bought 2.57 million shares (which represents lower than one % of Tesla’s market capitalisation), paying between $372 and $397 per share as the value different via the day, in accordance with regulatory filings. He now owns virtually 20 % of Tesla, which seemingly pleases its traders.

Tesla’s share value rose to round $422 on Monday – nonetheless 12 % decrease than its all-time excessive of $479 (reached in December 2024). Following his current transfer, Musk posted on X that the rise in Tesla’s worth was “foretold within the prophecy”.

Whereas Musk wasn’t an authentic founding father of Tesla – he invested within the firm one 12 months after it was established – he grew to become chairman in 2004. The South African entrepreneur has persistently demanded a much bigger stake and extra voting energy at Tesla, having beforehand mentioned he would favor to construct AI merchandise and robots exterior of Tesla if he can’t management 25 % voting energy within the agency.

Musk offered greater than $20bn of Tesla’s inventory (or 4.6 % of its market cap) in 2022 to fund his acquisition of Twitter, now X, for $44bn. He additionally owns non-public holdings in SpaceX, Neuralink and The Boring Firm.

Is Musk actually being paid $1 trillion?

The Tesla CEO should meet sure performance-related standards first. To unlock the complete $1 trillion payout, Musk should elevate the corporate’s valuation from roughly $1 trillion as we speak to $8.5 trillion over the following 10 years. He may even need to promote a million autonomous taxis and a million robots and enhance Tesla’s income by greater than 24 occasions what it earned final 12 months.

Tesla at present operates just a few dozen autonomous taxis in a restricted space within the metropolis the place it’s headquartered, Austin, Texas within the US. Referred to as “robotaxis“, they’re self-driving automobiles however are accompanied by human “security supervisors”, who can intervene if issues happen.

On the robotics facet, the corporate unveiled its first humanoid robotic – Optimus – in 2022. In 2024, Musk claimed that Tesla would deploy robots for “inside use [ie for use inside its own factories]” in 2025, and that it could have produced 5,000 items by then. Neither pledge has been met to date.

Musk additionally just lately said that “80 % of Tesla’s [future] worth can be Optimus”.

How has Musk’s pay at Tesla risen over time?

After Musk joined Tesla in 2004, he took little or no money pay. As a substitute, he selected to be paid in fairness. Then, in 2018, shareholders accredited a landmark 10-year pay bundle for Musk – linked to numerous operational targets – estimated at $2.6bn.

As Tesla’s market worth surged after the beginning of 2020 (when it was buying and selling at simply $29.50 a share), a lot of these pay targets have been met, and Musk acquired a lot of extra Tesla shares. Resulting from broad stock market gains because the COVID-19 pandemic, Musk’s earnings are estimated to have climbed by $40bn-$60bn.

Although Musk’s pay windfall at Tesla has attracted regulatory scrutiny for overcompensation, particularly from Delaware’s Court of Chancery, a lot of the firm’s shareholders have repeatedly ratified the CEO’s cost packages.

How do CEOs’ pay packets evaluate to these of common US staff?

Tesla doesn’t disclose non-executive salaries, so it’s laborious to say how Musk’s earnings compares to that of the common employee there.

Nonetheless, company pay within the US has usually rallied in current a long time in comparison with that of staff. Based on the Financial Coverage Institute, common pay for CEOs at S&P 500 corporations  – the five hundred largest listed corporations within the US – rose by virtually 1,000 % over the 50-year interval main as much as 2024.

Against this, a typical employee at an S&P 500 firm has seen his or her pay packet rise by simply 27 % (adjusted for inflation) over the identical interval. Said in a different way, the CEO-to-worker pay ratio has elevated from 30:1 to 350:1 over the previous 5 a long time.

In an interview final week with Crux, a Catholic information web site, Pope Leo singled out Elon Musk for instance of the form of wealth he mentioned was corroding “the worth of human life, of the household, of the worth of society”.

Requested about Tesla’s proposed $1 trillion pay packet, Leo responded: “What does that imply, and what’s that about? If [personal wealth accumulation] is the one factor that has any worth any extra, then we’re in massive bother.”

Is Tesla in bother?

Regardless of its current uptick, to date this 12 months, Tesla’s inventory market efficiency has been among the many worst of the “Magnificent 7” group of tech giants – which additionally consists of Alphabet, Amazon, Apple, Meta, Microsoft and Nvidia – having misplaced round 2 % of its worth this 12 months to date.

Tesla’s most up-to-date quarterly outcomes confirmed revenue losses amid falling demand for electrical automobiles and elevated import manufacturing prices related to US President Donald Trump’s commerce tariffs. Trying forward, earnings look set to proceed falling.

Gross sales of Tesla automobiles within the US will possible fall additional within the final three months of 2025, as Trump has refused to increase a tax credit for EV purchases for US customers after October. To date, the rebate has performed a vital function in making American EVs extra inexpensive.