A trillionaire in the making? Elon Musk's massive Tesla payout explained

Will Elon Musk become the world's first trillionaire?

If Tesla hits some lofty goals, the answer might just be yes!Tesla's board has proposed a 10-year pay package that ties Musk's compensation directly to Tesla's performance.

The plan, which runs for 10 years and must be approved by shareholders, provides for the granting of shares to Musk based on Tesla's market valuation, according to a filing with the US Securities and Exchange Commission.

The $8.5 Trillion Target

The maximum number of shares he could receive corresponds to 12 percent of the company's current number of shares, but is conditional on "stratospheric growth" and a market valuation of $8.5 trillion.

The company's current market capitalization is around $1 trillion. Nvidia, currently the world's most valuable company, is worth around $4 trillion.

Potential $1 Trillion Payday

"The preliminary aggregate fair value estimate of the 2025 CEO Performance Award is $87.75 billion," the filing says, but that would swell to about $1 trillion if Musk hits all the performance targets and collects restricted shares.

To cash in fully, Musk also has to hit some big targets, which include delivering 20 million vehicles and launching a million robotaxis. If and only if that happens, his potential payout will be....One trillion dollars.

Interim $29 Billion Award

Earlier this month, Tesla announced an "interim" compensation award worth about $29 billion for Musk, asserting the need to retain the controversial CEO at a moment of fierce competition for top talent.

Challenges at Tesla

The developments come as Tesla challenges a Delaware court ruling that struck down a 2018 package for Musk of about $55.8 billion.

Already the world's richest person, Musk is viewed within the business world as a unique talent after his success with building Tesla and SpaceX into major global companies.

But his stewardship at Tesla has come under scrutiny in the last year as car sales and profits have tumbled.

This trend has been partly due to Musk's support for far-right political causes, but it is also is related to a sluggish rollout of new auto models after the polarizing Cybertruck sold poorly.