If Elon Musk makes sure Tesla keeps growing over 10 years—by the numbers that matter to investors—he could emerge the wealthiest person in the world.
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Under a new compensation plan for Musk, the CEO’s compensation will be based entirely on the financial performance of the company. “Elon will receive no guaranteed compensation of any kind—no salary, no cash bonuses, and no equity that vests simply by the passage of time,” the company announced as part of a plan that is contingent on the approval of shareholders in late March.
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The plan was patterned after a similar one that was put into place for Musk in 2012—one for which Musk ended up meeting nine out of 10 milestones that included development targets for the Model X and the Model 3. This time the 12 milestones, over 10 years, are entirely rooted in financial targets—for market capitalization and for operational milestones including revenue.
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The plan does leave room for a separate Tesla CEO to be appointed below Musk. And it adjusts the milestones upward if Tesla acquires other companies or downward if it spins off areas of its business as new companies. And it claims to create almost $ 600 billion in shareholder value at the end of the 10-year period.
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What’s in it for Musk? One element is that he’ll be able to use his shares in Tesla to back loans for other ventures. Musk can’t actually sell any of his shares for five years after exercising the options, though. The package is projected to be worth about $ 55.8 billion if Musk accomplishes it all—which, according to some sources, including Bloomberg, could help make him the world’s richest person.
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Faith in Master Plan
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In the preliminary documents, the board that oversees the company pointed to Tesla’s Master Plan, Part Deux, which aims to expand solar-energy generation and integrate solar products with battery storage, build out the vehicle product line “to cover all major forms of terrestrial transport” including a semi, advance autonomous technology, and enable customer cars to make money for them when not being used. “With these goals, the Board believes that Tesla has the potential to become one of the most valuable companies in the world,” the proposal stated.
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Musk is not technically one of the original founders of Tesla but is widely considered a co-founder, and he has taken ownership in the company in a way that few other CEOs have for any company. From his earlier investments of his own money in Tesla to keep it going—and, for the most part, to meet the goals of his original Master Plan—to recently camping out alongside the Model 3 production line, he (and his Twitter account) have become the outward face of the company.
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The new compensation plan comes amid growing concern that Musk might turn his attention from Tesla to one of his other projects such as SpaceX or the Boring Company—any of which might have their own lucrative returns—or jump wholeheartedly aboard a plan to colonize Mars (yes, really).
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- Elon Musk’s Tesla Master Plan, Part Deux: Semis and Pickups, Solar Roofs, and Car Sharing
- Elon Shows Us His Semi: Tesla’s Next Big Thing Is Big Indeed
- Tesla Model 3: Photos, News, Info
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Today’s Tesla enjoys a market valuation that last year passed that of General Motors and Ford plus a soaring stock price that has, in recent days, been trading at more than $ 350 a share. That has all come despite some hefty quarterly losses and an especially clumsy production ramp-up for its Model 3 sedan. And despite how ambitious these targets sound, they still don’t put any guarantee on long-term profitability—just that the hype machine could carry on for quite some time.
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