Tesla’s board has proposed an unprecedented pay package for CEO Elon Musk, potentially exceeding $1 trillion if he meets specific ambitious targets over the next decade. Especially not in a time when Musk is the world’s richest man. His riches magnify his considerable clout, having made him a major player in the tech and auto industry.
Under the terms of this radical proposal, Musk’s remuneration package would be worth about £740 billion. To realize this massive payout, Musk will have to hit some difficult performance targets. This would entail accomplishing a 24-times increase on one of Tesla’s non-GAAP earnings measures. Further, he needs to deploy one million robotaxis and sell one million AI robots. On top of all that, Musk has another 12 million Tesla cars to sell.
The very first milestone laid out in this plan so ambitious it takes place over 10 years is achieving a $2 trillion market capitalization. To make sure this happens, Musk will be granted the shares in 12 tranches, each linked to a series of market cap performance thresholds. Most significantly, the proposal requires that Musk will not receive any salary—or any conventional bonus—under this arrangement. Instead, his pay depends solely on Tesla reaching an impossible $1 trillion market cap, almost 8 times what Tesla is worth today.
Tesla chair Robyn Denholm sent a fierce commendation of the proposal. She stressed the huge economic development potential these ambitious targets can unlock. “This plan aligns Musk’s vision for Tesla with the company’s long-term goals,” Denholm stated. The ambitious nature of this proposal has been welcomed by analysts and investors as a mixed bag.
Investment analyst Dan Coatsworth described the proposed pay award as ridiculous. She emphasized that the milestones Musk has to reach are extremely difficult. While some are doubtful as to the practicality of these ambitious goals, Tesla seems undaunted by the naysayers as they forge ahead in innovation and expansion.
Just last month, Musk was granted $29 billion in shares, thanks to Tesla’s incredible growth and profitability. This recent compensation underscores the company’s commitment to rewarding its leadership based on performance metrics aimed at enhancing shareholder value.