Monday 17 December 2018

Huge pay plan to tie Musk to Tesla for 10 years

Tesla CEO Elon Musk. Photo: Reuters
Tesla CEO Elon Musk. Photo: Reuters

Dana Hull and Tom Lavell

Billionaire Elon Musk has set a series of aggressive growth targets at Tesla that would make the electric carmaker one of the world's most valuable companies within the next decade, and assured shareholders he'll stick around by tying his compensation to those goals.

The unprecedented pay package proposes Musk won't get paid unless his company's stock rises, further tying the 46-year-old chief executive officer's personal wealth to that of shareholders. It envisions a staggering increase in market value to $650bn (€530bn) that would put Tesla in the league of tech giants like Google parent Alphabet and Microsoft, now more than 10 times its size. Revenue would expand to $175bn, ahead of General Motors.

The move assures investors that Musk will lead Tesla through its next phase of rapid growth despite his many other commitments and interests. He is also the CEO of Space Exploration Technologies and has embarked on several other ventures including OpenAI, Neuralink and the Boring Company.

Under the plan, which requires shareholder approval in March, Musk's pay is tied strictly to stock performance and profit. He will receive no salary or bonus. A 10-year grant of stock options vests in 12 tranches that are linked to market capitalization in $50bn increments, starting at $100bn. There are also milestones tied to revenue and adjusted earnings before interest, taxes, depreciation and amortization, Tesla said in a statement.

Musk, who is already the biggest Tesla shareholder, has a net worth estimated at $21.5bn, according to the Bloomberg Billionaires Index. The new pay plan would add as much as $55.8bn to that total. (Bloomberg)

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