In its proxy statement filed last week, Tesla said it needed to offer CEO Elon Musk a record-breaking compensation package to compete with his private companies.
The document detailed a stock incentive plan that could be worth as much as $1 trillion if fully vested. Tesla also said that Musk's other companies (primarily SpaceX and xAI Holdings) now account for the majority of his wealth, and therefore will consume the majority of his attention unless Tesla offers him higher compensation.
"The majority of Musk's wealth now comes from his other business ventures outside of Tesla, and he now has more attractive options than ever before," the proxy statement said. It added that the 423 million-share compensation package was necessary to prevent Musk from "prioritizing other businesses."
Of course, the plan must be approved by shareholders. But the proxy statement highlights the soaring valuations of Musk's private companies and the conflicts of interest between xAI, SpaceX, and Tesla.
Until last year, the vast majority of Musk's wealth came from his Tesla stock.
The Bloomberg Billionaires Index puts Musk's wealth at approximately $385 billion, while Forbes estimates it at $436 billion. The discrepancy may be related to his 2018 compensation package, which remains controversial and has been valued between $60 billion and $100 billion.
If that compensation package is reinstated, or if he receives the interim compensation package proposed in his proxy statement, Musk's net worth would be closer to $436 billion.
Today, less than half of his wealth comes from Tesla stock.
Based on Musk's current 13% stake in Tesla, his Tesla stock is worth approximately $140 billion. Musk believes that as Tesla develops highly sensitive and powerful artificial intelligence technology and robotics, he needs at least 25% voting control to prevent a takeover.
In SpaceX and xAI, he holds a larger voting stake, holding a 42% stake in SpaceX and a majority stake in xAI. SpaceX is reportedly planning an internal stock sale that would value the company at $400 billion, nearly double its valuation last year. At a $400 billion valuation, Musk's stake would be worth approximately $170 billion, exceeding the value of his current Tesla holdings.
xAI's valuation has grown even faster, from $80 billion at the beginning of the year to a potential $200 billion in a new round of funding. Musk holds over 50% of the company, making his stake well over $100 billion.
Currently, Musk's combined holdings in xAI and SpaceX are worth nearly twice as much as his Tesla shares. Adding in his holdings in Neuralink (valued at approximately $9 billion) and other companies, his wealth from private companies already exceeds his wealth from Tesla.
Of course, this situation may not last. If he receives 423.7 million restricted stock shares in his new compensation plan in 2025 and Tesla reaches its target valuation of $8.5 trillion, Musk's Tesla stake will be worth over $2 trillion.