Tesla Pay Deal Could Make Elon Musk The World's Richest Man
Tesla CEO Elon Musk has always been bold, from his visions to the way he runs his companies the South African billionaire always manages to wow observers. Now, he once again manages to grab headlines with perhaps the most daring pay plan in corporate history.
The electric automaker granted its CEO a $2.6 billion award, the largest-ever of its kind highlighting the companies immense ambitions, as well as the key role Musk, plays in its future success. If fully vested over the course of a decade, and stock options would net him as much as $55.8 billion – enough to make him the world's richest man.
"It's breathtaking both in size and in terms of performance required to earn it," Steven Hall, managing director of compensation consulting firm Steven Hall & Partners, said of Musk's grant. "Like everything Musk is involved in, whether it's building a company from scratch or launching satellites into space, this is beyond expectation."
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It's definitely breathtaking, and it needs to be because nothing will be guaranteed along the way. This means zero salary and no cash bonuses, Musk's massive reward can only be reaped if Tesla succeeds in becoming one of the world's biggest companies and that is a man sized if. There's also no clear roadmap on how to get there which makes this pay deal pretty much like Musk himself, big-picture, moonshot end goals, and particulars be damned.
Tesla has already set dozens of target valuations each $50 billion more than its predecessor with the end goal being a market value of $650 billion. This is in addition to a dozen revenue and adjusted profit goals which Musk also needs to reach before Musk could receive 1.68 million shares or roughly one percent of the company.
Under the terms of the arrangement, Musk cannot manipulate the stock price in order to cash out requiring that once he vests his stocks, he also has to hold them an additional five years before he is allowed to sell them. The pay deal is as blunt as it can be: either Musk performs his magic or he gets nothing. That being said, Musk doesn't seem all too concerned about not receiving a dime expressing his belief that Tesla can become a trillion dollar company in a decade.
"If all that happens over the next 10 years is that Tesla's value grows by 80 or 90 percent, then my amount of compensation would be zero," he said. "I actually see the potential for Tesla to become a trillion-dollar company within a 10-year period."
