Lofty goals are being set to ensure Tesla becomes one of the biggest companies in the world

Elon Musk is no stranger to taking risks. He built his fortune on the backbone of taking risks. He’s done it in the past, and it looks like he’s doing it again in the form of a 10-year compensation plan that could turn him into the richest man in the world if he accomplishes all his goals for the electric car brand. Tesla’s board of directors reportedly took six months to come up with Musk’s new compensation plan. As a board member himself, Musk recused himself from crafting the plan. He likewise has no vote on whether to pass or scrap it.

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Musk’s compensation is directly linked to Tesla’s growth, specifically the company increasing its market cap ten-fold over the next ten years.

If Tesla’s board of directors decides to go with the new plan, Musk’s new long-term compensation plan will be similar to Musk’s current compensation plan, which was based heavily on reaching milestones and being rewarded with tranches of stock options. The new plan is a juiced up version of the old plan. Musk’s compensation is directly linked to Tesla’s growth, specifically the company increasing its market cap ten-fold over the next ten years.

All in all, Musk’s new compensation plan consists of a 10-year grant of stock options that vest in 12 tranches, each of which is tied to milestones that Musk must achieve as Tesla CEO. The first tranche is tied into Tesla’s goal of increasing its market capitalization to $100 billion. Currently, Tesla’s market value sits at $60 billion.

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Musk’s new compensation plan consists of a 10-year grant of stock options that vest in 12 tranches, each of which is tied to milestones that Musk must achieve as Tesla CEO

Once that goal is reached, Musk will unlock the remaining 11 tranches if Tesla can increase its market value in $50 billion increments. If the company increases its market value to $150 billion, Musk unlocks another tranche. If he gets it to $200 billion, he unlocks another one. The ultimate goal is for Tesla to increase its market value to a staggering $650 billion by 2028.

Breaking down the incentives attached to each tranche reveals that Musk will receive 1.69 million shares for every $50 billion increase in Tesla’s market value. If he manages to achieve all his goals, Musk’s shares in the company would balloon to 30 percent, jolting his own net worth to around $200 billion. It sounds inconceivable for Musk to achieve all the goals laid out in this new compensation plan, but stranger things have happened in the life of Tesla’s CEO.

It wouldn’t be the first time if he somehow ends up proving us all wrong.

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