As Tesla locks in its third major big battery project on the Australian grid, the US EV and battery maker’s founder, CEO and chief visionary, Elon Musk, looks to have locked in a whopping-great, record-breaking, investor-backed performance bonus.
A Tesla shareholder vote on Wednesday has approved a 10-year, $2.6 billion compensation package for Musk – setting the course for what would be the highest ever individual executive equity award.
But, of course, Ts & Cs apply. The package is based almost entirely on incentives for performance, including the rather ambitious goal of raising Tesla’s market value to $650 billion over the next 10 years – up from $53.6 billion now.
The kicker, however, is that if Musk manages to hit this and other financial goals, he could wind up bagging as much as $55.8 billion in Tesla stock and more than a quarter of the EV company.
Which has Forbes magazine wondering, is Elon Musk the most valuable CEO in the world? And also, why make such a sensational announcement?
As Reuters reports, the vote result – 73 per cent in favour – indicated that “some, but not all” big investors were prepared to support the payout.
Proxy advisory firm Institutional Shareholder Services – which has noted that the award, if achieved, surpasses anything previously granted to top US executives – recommended votes against the compensation.
Others argue it is a move to keep the faith – and the money – of Tesla investors in place. “Musk wants to convey that he is the ultimate ‘skin-in-the-game’ CEO,” says Forbes David Kiley.
And a bit of faith is needed. After all, Musk has perfected the art of sensational product launches, locking in orders, getting the book full, and then working out how to get the batteries/cars/semi trucks/solar roof tiles into production.
The company is well behind on delivery of its mass-market Model 3 EV, for which more than 400,0000 people have reportedly put down a refundable $1000 deposit.
Musk has been up front about the various levels of “production hell” the company has been through on the road to delivering the Model 3.
But we will find out just how patient people are prepared to be on April 1, when the company is due to reveal whether it is meeting its latest and much downgraded production target of 2,500 cars a week.
So will the pay-day incentive work?
“It’s a win-win for shareholders and for Musk,” said Efraim Levy, stock analyst at CFRA Research. “If the stock goes up, they both gain.”
At time of writing the Tesla share price was up $US5.98, to $US316.53, in after hours trading on the Nasdaq.
“On the other hand,” Levy added, “is it really necessary to incentivise (Musk) so highly? He’s already an owner and has staked his personal reputation on Tesla’s success.”