Musk’s Tesla Pay Deal Helps Drive CEO Compensation Higher

Chief executive compensation at S&P 500 companies reached a record level in 2025, with Elon Musk’s extraordinary Tesla pay package emerging as a benchmark for other corporate boards, according to a study reported by Reuters.

Average compensation for S&P 500 CEOs excluding Musk climbed 21% last year to $22.8 million, based on data from the American Federation of Labor and Congress of Industrial Organizations. The figure represents the highest level recorded since the AFL-CIO began tracking executive compensation in the 1990s.

AFL-CIO Secretary-Treasurer Fred Redmond told Reuters that Musk’s compensation at Tesla “changes the dynamic when other CEO compensation plans come up” and said that “boards use it as a reference.”

When Musk’s Tesla package is included, average compensation plans for S&P 500 chief executives exceeded $340 million. Musk’s award could ultimately be worth more than $1 trillion if Tesla meets the performance targets attached to the agreement.

Musk remained the world’s richest person as of Thursday morning, with an estimated fortune of $870.6 billion. His wealth was more than twice that of Google co-founder Larry Page, whose fortune was estimated at $284.3 billion, and Amazon founder Jeff Bezos, who was worth about $275.7 billion. Page and Bezos ranked second and third, respectively, among the world’s wealthiest people.

The SpaceX and Tesla chief became the first person to reach trillionaire status after SpaceX began trading in June. His fortune subsequently climbed to a record $1.45 trillion before a decline in SpaceX shares cut his net worth roughly in half. Musk appeared to reference the reversal on X last month, describing himself as a “(Former) trillionaire.”

Tesla shareholders approved Musk’s compensation package last year, tying the potential rewards to a series of ambitious targets involving the company’s market value and vehicle sales. One of the goals requires Tesla to reach an $8.5 trillion market capitalization within 10 years, while another calls for the automaker to sell an additional 12 million vehicles.

The package faced opposition from some investment organizations. Among them was the management firm responsible for overseeing Norway’s sovereign wealth fund, which said it was “concerned about the award, dilution and lack of mitigation of key person risk.”

Musk’s compensation arrangements at SpaceX also contain performance-based objectives tied to major long-term ambitions. They include establishing a “permanent human colony” on Mars with at least 1 million residents and developing “non-Earth-based” data centers capable of providing 100 terawatts of computing capacity annually.

That proposed SpaceX computing capacity would be roughly 29 times the amount of electricity generated worldwide in 2023, according to the comparison cited in the report.