Tesla proposes payout if Musk can meet goals
Elon Musk is known for his bold predictions on electric and self-driving cars. Now his pay could depend on whether those predictions come true.
Under a new all-or-nothing pay package, Musk would remain at Tesla Inc. for the next decade and see his compensation tied to ambitious growth targets.
The proposal, revealed Tuesday in a regulatory filing, requires that Tesla grow in $50 billion leaps, to a staggering $650 billion market capitalization.
The electric carmaker, based in Palo Alto, California, is worth less than $60 billion today. Tesla must hit a series of escalating revenue and adjusted profit targets, only after which Musk would vest stock options worth 1 percent of company shares. He would get no other guaranteed compensation.
The pay package, developed over the last six months by Tesla's board, still needs the approval of Tesla shareholders, who will vote on it at a special meeting in late March. Musk and his brother Kimbal, who is a Tesla board member, will recuse themselves from the vote.
If the goals are reached, Tesla would be one of the biggest companies in America. The $650 billion benchmark would make Tesla the fourthmost valuable U.S. company, behind only Apple Inc., Alphabet Inc., and Amazon.com Inc. based on current valuations. It would be larger than Microsoft Corp., and would exceed the current combined valuation of the world's top eight publicly-traded auto companies.
The pay scheme would also catapult Musk into the ranks of the world's richest people. Musk's stock options could be worth up to $55.8 billion if he meets the company's goals. He also would own a 28 percent stake in Tesla, which would be worth $182 billion. Forbes' current richest billionaire, Microsoft co-founder Bill Gates, is worth $86 billion.
Musk has long had ambitious plans for Tesla. In a 2015 earnings call with analysts and media, he predicted Tesla could match Apple in total value by 2025.