Elon Musk's $1 Trillion Pay Package: A Delusional Goal?
Tesla CEO Elon Musk has a history of delivering on seemingly impossible goals, but the targets for his new pay package are even more ambitious. On September 5, the company's board unveiled a long-term compensation plan that promises a total payout of $1 trillion to Musk if he meets all the objectives.
The package is based on Tesla's market value and its ability to meet specific financial milestones. According to the terms, Musk will receive stock options and restricted stock units (RSUs) tied to the company's performance over the next five years. The targets include increasing Tesla's market capitalization to $650 billion by 2025, achieving a gross margin of 25% by 2024, and delivering 20 million vehicles per year by 2030.
"This is an extremely aggressive plan," said David Kudla, CEO of Mainstay Capital Management. "It's not just about the numbers; it's about the pace at which Tesla needs to grow to meet these targets."
Musk has a history of delivering on ambitious goals. In 2018, he met the targets set for his previous pay package, which included increasing Tesla's market value to $650 billion and delivering 500,000 vehicles per year by 2020. The company's stock price soared as it met these objectives, handing Musk tens of billions of dollars in gains.
However, some analysts question whether Tesla can sustain such rapid growth. "The targets are indeed ambitious, but the real challenge is not just meeting them but sustaining that pace over several years," said Dan Ives, managing director at Wedbush Securities.
Tesla's stock price has been volatile in recent months, and some investors have expressed concerns about the company's ability to meet its financial obligations. However, the company's board remains optimistic about its prospects.
"We believe this compensation plan is a testament to our confidence in Elon's vision and leadership," said Robyn Denholm, Tesla's chairwoman. "We're committed to making sure that our shareholders benefit from his success."
The package has been met with skepticism by some investors who question whether Musk can meet the targets. However, others see it as a vote of confidence in the company's prospects.
"It's a bold move, but it's also a reflection of Tesla's potential," said Gene Munster, managing partner at Loup Ventures. "If anyone can make this happen, it's Elon Musk."
The compensation plan is subject to shareholder approval and will be put to a vote at Tesla's annual meeting in 2020.
In the meantime, investors will be watching closely as Tesla works towards meeting its ambitious targets. As Kudla noted, "It's not just about the numbers; it's about the pace at which Tesla needs to grow."
*Reporting by Fortune.*
