Elon Musk could be worth up to $50 billion more in 2028, as Tesla's shareholders agree to an eye-watering incentive package that will vest only if he hits a number of ambitious financial targets.
Tesla’s shareholders have approved a performance award for CEO Elon Musk, which could potentially be the largest one-time compensation deal in history.
At a special meeting in Fremont, California, investors green-lighted the board’s proposal to grant Musk stock options valued at $2.6 billion.
The compensation would be divided into 12 tranches, and will vest every time the company meets a pair of key performance milestones — one tied to its market value and the other linked to either revenue or earnings excluding certain charges.
He will also be required to remain at Tesla either as CEO, or executive chairman and chief product officer, for the next decade.
According to Bloomberg, for Musk to receive the full package, Tesla’s market value would have to grow to $650 billion from around $60 billion — which at the time of writing would make it the fifth largest company behind Apple, Alphabet, Amazon and Microsoft. It would also have to produce more revenue than Procter & Gamble Co.
In regulatory filings, Tesla has indicated the stock options could be worth $50 billion to the 46-year-old.
Keeping Musk focused on Tesla
Musk has his fingers in a number of pies.
Most notably, he is also chief executive of Space Exploration Technologies Corp, otherwise known as SpaceX, which last month launched the most powerful rocket in operation — Falcon Heavy.
The private firm is also constructing a super ‘BFR’ rocket, which Musk hopes will be capable of “short up and down trips” to Mars as soon as next year. His ultimate vision, of course, is the colonisation of the red planet.
Then when you throw in his side projects like tunnel digger The Boring Company, and a startup called Neuralink, which aims to connect the human brain to computers, and it’s easy to see why shareholders of Tesla would want to incentivise Musk to reaffirm his commitment.
Baillie Gifford & Co. and T. Rowe Price Group Inc., which combined hold about 14% of Tesla’s stock, have not commented on the vote as yet, but previously voiced support for the equity award, saying that it’s well-aligned with performance and the future success of the company was closely tied to Musk.
It is understood 73% of the votes cast in person or by proxy at the meeting were in favour, and the board needed majority approval to rubber-stamp the grant.