Elon Musk’s new performance award deal with Tesla is a 10-year plan hinging on company performance. Beginning with $100 billion and ending with $650 billion, each time the company’s market capitalization increases by $50 billion, Musk will be awarded shares.
Teslasaid on Tuesday that it was introducing a set of targets for its chief executive to meet in order for him to receive future pay.
First off, Musk needs to increase the company’s market cap to $100bn.
To put those demands in perspective, the electric auto maker, based in Palo Alto, California, is worth less than $60 billion today. We are about to see a massive mobility revolution which Tesla is leading. The prototype of the truck has an impact-resistant glass, a streamlined cabin design and the ability to go from zero to 97 km/h within five seconds. In either case, all leadership must report to Musk.
MI doesn’t allow Tesla sales due to the fact that the company doesn’t employ traditional dealerships. Achieving this goal would make Tesla one of the most valuable companies in the world.
There are few who now expect Tesla to come close to meeting Musk’s original goal of producing 500,000 vehicles in Fremont this year. The company has now pushed that number back to June.
Musk has vast personal wealth. The compensation scheme could potentially rake in billions for Musk. To hit the final target Tesla will also have to hit sales and profits targets, including revenue of $175bn-a-year – which is more than General Motors’ sales. “Because all Tesla employees are provided equity, this also means that Elon’s compensation is tied to the success of everyone at Tesla“.
For hitting these goals, Musk would receive 1.69 million shares of the company (about 1 percent). This isn’t about Musk getting even more money, though that’s certainly important. At its current state, Tesla has already evolved into a company that not only makes cars; it also makes industry-changing energy solutions and with ambitions to create a fully autonomous ride-sharing network.
“We rarely, if ever, see 100 percent performance-based compensation”, Equilar’s Marcec said.
After setting all kinds of new trends as an eccentric CEO, Elon Musk is taking on a new battle of his own.
The move assures investors that Musk will lead Tesla through its next phase of rapid growth despite his many other commitments and interests. Over his career, he has been involved in four businesses with family members, and it’s clear his businesses regularly cross paths and transact with each other.
Should the shares continue their heady rise – they have climbed by a third in recent years – the payout will be much greater.