The board of Tesla (TSLA:NASDAQ) is asking investors to approve a record pay package which could deliver Elon Musk as much as $1 trillion in stock over the next decade.
The deal will allow Musk to receive instalments of shares if Tesla hits a series of market capitalisation and business operational milestones. The board is proposing to offer Musk up to an additional 12% stake in the electric vehicle maker if all milestones are met, or up to 423.7 million additional shares over the next decade.
To get the full stock package, Tesla will have to hit a series of seemingly outlandish targets, including a market value of nearly eight times its current capitalisation and twice as much as any company on the planet has ever been worth, together with enormous profit goals.
Tesla will also have to massively expand its full-self driving subscriptions, scale its robotaxi fleet and demonstrate a substantial market for its Optimus humanoid robots.
The pay package will also have to overcome likely legal challenges. The world’s richest person has consistently asked for a bigger stake in the company to gain more control, even as a legal battle over his 2018 pay package, then valued at a mere $56 billion, continues.
The newly proposed award is roughly 18 times the size of the contested plan and is close to the company’s current market valuation of $1.09 trillion.
The proposal highlights the board’s confidence in Musk’s ability to steer the company in a new direction while reigniting growth, even as it loses ground to Chinese rivals in key markets amid softening EV demand.
‘While bold compensation tied to performance is nothing new, the sheer scale here sets a new bar for CEO incentives and will dominate boardroom debates everywhere’, said Adam Sarhan, chief executive of 50 Park Investments in New York, as reported by Reuters.
Tesla’s board will also hope such a massive financial commitment to Musk will refocus the chief executive back on the company and its growth strategy after a series of political distractions.
Musk has transformed Tesla from a niche EV start-up into the world’s most valuable automaker, scaling production, expanding globally and pushing the industry toward electric mobility, while running several other companies including SpaceX, xAI and Neuralink.
These articles are provided by Shares magazine which is published by AJ Bell Media, a part of AJ Bell. Shares is not written by AJ Bell.
Shares is provided for your general information and use and is not a personal recommendation to invest. It is not intended to be relied upon by you in making or not making any investment decisions. The investments referred to in these articles will not be suitable for all investors. If in doubt please seek appropriate independent financial advice.
Investors acting on the information in these articles do so at their own risk and AJ Bell Media and its staff do not accept liability for losses suffered by investors as a result of their investment decisions.
magazine
