Radical New Compensation Plan For Tesla Chief Elon Musk Would See Billions Or Nothing Being Paid To Him

Electric car maker Tesla’s founder and CEO Elon Musk has set a daunting target for his company which, if achieved, would set the company among the most valued companies within the next decade and Musk has reassured the shareholders that heh would be stay with the company and keep his compensation in line with the goals he has set for the company.

The personal wealth of the 46-year-old chief executive officer would remain tied with the fate of the company and the wealth of the shareholders as this unique proposed pay package would see Musk getting paid only when the company makes a profit and its stocks rise.

The plan considers the assumption that the company would achieve an ultimate market value of $812.6 billion and would place Tesla alongside the tech giants such as Google parent Alphabet, and Microsoft. The value would be close to eight times the present value of the company. it is also anticipated that total revenues for the company would reach $US175 billion, ahead of General Motors.

The salary of Musk would be tied to the stock and operational milestones of Tesla.

The move is an assurance to shareholders that Musk would stick around and lead Tesla along the time curve of rapid growth of the company despite multiple other commitments and interests of Musk. Ventures such as OpenAI, Neuralink and the Boring Co are have been initiated by Musk and additionally he also is presently the CEO of Space Exploration Technologies.

The new pay package of Musk would have to be approved by the shareholders. No salary or bonus would be given to him. Tesla said in a statement that revenue and adjusted earnings before interest, taxes, depreciation and amortization milestones would also decide the salary of Musk.

According to the Bloomberg Billionaires Index, Musk has a net worth estimated at $US21.5 billion and is already the biggest Tesla shareholder. To that total wealth, about $US55.8 billion would be added according to the new pay plan. But considering the potential for addition of new awards of employee stock in addition to the potential of mergers or raising new capital, the proposed pay amount is largely theoretical.

“While Tesla has no way of predicting how much dilution there will be, some amount of future dilution is a certainty,” the company said in a filing.

There are over 33,000 employees with California based Tesla globally. The company has recently launched its Model 3 sedan which is a more affordable electric car and is central to the plans of the company to appeal to the mass market as well as attain profitability. Musk’s proposed compensation plan however does not include vehicle output targets because the company ran into trouble to ramp up production of the car.

“It’s breathtaking both in size and in terms of performance required to earn it,” Steven Hall, managing director of compensation consulting firm Steven Hall & Partners, said of Musk’s grant. “Like everything Musk is involved in, whether it’s building a company from scratch or launching satellites into space, this is beyond expectation.”

(Adapted from SMH.com.au)


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