Tesla’s New Compensation Plan For Musk – Meet These Goals Or You Get Nothing
He’s already a billionaire though…
Electric car maker Tesla has come out and said that its boss Elon Musk will only be paid if the company starts performing.
Tesla has faced financial struggles of late – growing debt and production delays have hurt its bottom line.
Now, the company is taking action by insisting its CEO won’t be paid until the company achieves ‘a combination of market capitalization and operational milestones’ in a bid to turnaround its fortunes.
Musk ‘will receive no guaranteed compensation of any kind – no salary, no cash bonuses, and no equity that vests simply by the passage of time,’ Tesla said.
Musk’s new incentive includes a decade-long grant of stock options broken into 12 portions that Musk will only get if certain milestones are met by the company. The first milestone is to increase Tesla’s market capitalization to $102 billion with more stock options opening up at $51 billion intervals.
‘Thus, for Elon to fully vest in the award, Tesla’s market cap must increase to $661 billion,’ the Californian tech company said.
To achieve the operational milestone, the California-based firm said it must meet a set of ever-increasing revenue and adjusted earnings targets, which come before interest, taxes, depreciation and amortization targets.
Tesla’s board stated:
“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. 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. Although there is no current intention for this to happen, it provides the flexibility as Tesla continues to grow to potentially allow Elon to focus more of his attention on the kinds of key product and strategic matters that most impact Tesla’s long-term growth and profitability.”