Musk Will Have to Sell a Lot of Robots to Get That $1T Payday

Elon Musk's path to a potential $1 trillion Tesla payday, approved by shareholders on Thursday, comes with a steep set of challenges. The pay package could eventually give Musk a 25% stake in Tesla, but only if he and the company clear a series of financial and operational hurdles. As it stands, Musk controls about 15% of Tesla's shares, not counting options from a 2018 award still tied up in court.

• The new plan could add 424 million more shares to his name, split across 12 tranches—each tied to ambitious targets that must be met for Musk to cash in, the Wall Street Journal reports. The first set of hurdles are market-cap milestones, starting at $2 trillion and peaking at $8.5 trillion—well above Tesla's current $1.5 trillion value. For context, hitting the upper end would put Tesla in the rarefied air of companies like Nvidia, currently the world's most valuable firm.

• On the operational side, four milestones focus on Tesla's core products and future bets, including selling 20 million vehicles, landing 10 million self-driving subscriptions, deploying 1 million robotaxis, and delivering 1 million humanoid Optimus robots—products that are still largely in development.
• The remaining eight milestones are tied to Tesla's profitability, using a version of earnings called adjusted Ebitda, which stands for earnings before interest, taxes, depreciation, and amortization, the Journal reports. To unlock any of these, Tesla would need to more than triple its current profit levels, with the final tranche requiring $400 billion in annual adjusted Ebitda. Tesla's 2023 figure was $16 billion. Each time Musk clears a milestone, he gets equity equivalent to about 1% of Tesla's current shares, but he can't sell them for at least 7.5 years.

• Musk, accompanied by dancing robots, celebrated the results at Tesla's Texas gigafactory Thursday night, the Financial Times reports. He said that AI and robotics could "actually increase the global economy by a factor of 10 or 100." The Optimus robots, he said, aren't just the future of the company, they're the future of humanity. "It's going to be the biggest product of all time by far," he said. "Optimus is kind of like an infinite money glitch."
• Critics of the pay plan included the protest group Tesla Takedown, which pointed to issues the company is facing, the Guardian reports. "Elon Musk just got $1tn for failure," the group said in a statement. "Sales are down, safety risks are up, and his politics are driving customers away. This isn't leadership—it's the world's most expensive participation trophy."

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