Tesla will pay Elon Musk only if company stock does ‘extraordinarily well’
Elon Musk, the head of US electric vehicle producer Tesla, will only get paid if company stock shows strong performance, according to a plan approved by Tesla shareholders on Wednesday.
Shareholders agreed on a 10-year performance stock award “entirely contingent on achieving market cap and operational milestones that would make Tesla one of the most valuable companies in the world.”
Tesla said that Musk will “receive no guaranteed compensation of any kind – no salary, no cash bonuses, and no equity that vests simply by the passage of time,” and will be paid only if the company’s stock does “extraordinarily well.”
Each time Tesla’s stock grows by $50 billion, Musk will get one percent from the company’s market cap. If none of these goals are reached, he will not receive anything.
If Musk wants to get the maximum from the $50 billion award, company stock must skyrocket 1,300 percent from the current market cap of $50 billion and reach $650 billion.
“This ensures that Elon will continue to lead Tesla’s management over the long-term while also providing the flexibility to bring in another CEO who would report to Elon at some point in the future,” the company said earlier. Some institutional investors in the company have doubted the new plan, saying that Musk may lack motivation under this scenario.
The company’s stock grew 1.93 percent on the news to $316.53 per share. The company’s market capitalization now stands at $53.4 billion.
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