Elon Musk May Not Get Paid Under New Tesla Compensation Plan
Elon Musk will remain at the helm of Tesla for at least another decade, with the automaker today outlining a 10-year CEO performance plan for the South African-born entrepreneur.
Under the new plan, Musk will receive no monetary compensation of any kind. Instead, he will be given a “100% at-risk performance award,” as Tesla describes it, which will only see him get paid out if the company meets a series of highly ambitious performance milestones.
Musk’s 10-year grant of stock options will vest over 12 tranches. Each of the tranches will only vest if the market cap milestone is met. For the first milestone, Tesla must increase its market cap to $100 billion. Each cap is then reached at $50 billion increments, with the following one being $150 billion, then $200 billion and so on. For Musk’s stock to fully vest, Tesla’s market cap must reach a pie-in-the-sky milestone of $650 billion.
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“For vesting to occur when the milestones are met, Elon must remain as Tesla’s CEO or serve as both Executive Chairman and Chief Product Officer, in each case with all leadership ultimately reporting to him,” a Tesla statement reads. “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.”
If Tesla were to reach its desired valuation of $650 billion, it would be one of the largest companies in American by market capitalization. For reference, Apple is valued at around $800 billion USD, while Google and Microsoft are worth $676 billion and $608 billion, respectively.
Although Musk does not take a salary from Tesla, the automaker is required to pay him at least minimum wage under California law. According to The New York Times, Tesla pays him a little more than $37,000 annually, but Musk lets the money accumulate in a Tesla bank account rather than cashing in on it.
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Sam McEachern holds a diploma in journalism from St. Clair College in Windsor, Ontario, and has been covering the automotive industry for over 5 years. He conducts reviews and writes AutoGuide's news content. He's a die-hard motorsports fan with a passion for performance cars of all sorts.
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oh how sanctimonious of him! You know how dependent he is on taxpayers? Three of Elon Musks companies, Tesla Motors, SolarCity, and SpaceX, received approximately $4.9 billion in funding from the U.S. government. (and yes mentioning non-automotive SpaceX / SolarCity here is fair game because of the news articles on them here)