Tesla shareholders have approved a new pay package for CEO Elon Musk.
Earlier last month, we reported that Musk would likely be presented with a compensation package that removed all of his pay unless he hit certain milestones. The ambitious pay schedule would see Musk become exponentially richer should Tesla grow at a rate seen by few companies. If he failed, then he would get nothing.
Tesla’s shareholders voted in favor of such a compensation package on Wednesday, locking Musk’s pay behind key milestones, but also dangling a carrot that could one day make him over $55 billion richer.
According to sources speaking with CNBC, there are 12 market capitalization milestones and 16 revenue and earnings milestones. Musk’s pay is locked behind each market capitalization milestone and either one or two revenue/earnings milestones. The first market cap milestone is at $100 billion from Tesla’s current cap of $52 billion, and each subsequent milestone is in increments of $50 billion.
Musk’s eight revenue targets range from $20-$175 billion, and his eight earnings targets range from $1.5 to 14 billion. Must remain as either CEO or executive chairman and chief product officer in order to still qualify for the pay package. The idea is to ensure that Musk doesn’t get distracted by his many other projects, such as SpaceX or The Boring Company.
The final market cap is $650 billion--putting it in the same league as consumer giants like Amazon and Microsoft.
"If all of these milestones were to be achieved," said Tesla's proxy statement, "Tesla will have meaningfully achieved its mission of transitioning the world to sustainable energy and will have become one of the most valuable and successful companies in the world. This is our ambition."
Tesla’s investors are apparently not overly concerned with the difficulty Musk has had getting the Model 3 into full production, seeing that whether it happens this year or next Musk has a powerful incentive to at least get there eventually and provide them with a stable return on their investments.
Now, all Musk has to do is deliver.