Big batteries, massive pay day: Tesla shareholders approve $2.6bn Musk bonus plan

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Tesla shareholder vote approves 10-year, $2.6bn compensation package for CEO Elon Musk – a record individual executive equity award, but Ts & Cs apply.

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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.”

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19 Comments
  1. Joe 2 years ago

    How much money does any man or woman really need.

    • Hettie 2 years ago

      Good question. Enough for
      1 adequate, secure housing
      2 adequate food and water
      3 the means to keep warm or cool enough, and cook.
      4 adequate clothing
      5 transport.
      6 healthcare
      7 a bit of fun
      All include the family needs.
      I get by ok on less than $500 a week, but I own my home
      and have no dependents apart from my elderly dog.
      More would be nice.
      $50kpa would be luxury.

      Elon could house the homeless of USA, if he wanted to.
      Bill Gates could house the homeless of the world

      • John Saint-Smith 2 years ago

        Are billionaires a good idea? Nobody really needs that much money, so why do the shareholders think that it is important to ‘compensate’ Musk?
        A vexed question indeed. Elon and Bill might provide for the homeless, but should they do that instead of curing disease or building new technologies to save the planet?

        On the other hand, Charles and David Koch could fund even more homelessness, but they’d rather fund planet destroying madmen and fossil fuelled pollution. Shouldn’t we have the courage to do whatever is necessary to stop them?

        • Hettie 2 years ago

          They are all US citizens, and it’s US citizens who insist on the right to own assault rifles. Perhaps something should be done.

        • Ian 2 years ago

          If everyone was brought down to the state of the weakest member of society who is going to help people survive? If everyone was old and disabled then who would do the showering, caring, etc. If we were all barely scraping through life weak as farts in a wind storm who would tie down the battens or put out the fires. Imagine parents being as helpless as their babies – very pathetic. We need a range of people with a range of talents, we need strong heroes, people of vision, people with great wealth and vitality, people who can withstand the onslaught of enemies and disaster.

      • Catprog 2 years ago

        8. Make humanity a multi planetary species.

        • Hettie 2 years ago

          Oh dog! No.
          We’ve comprehensively buggered this one. What possible excuse for taking our vandalism to other planets.
          Besides, my list was about how much is enough for any person.
          Elon Musk may fancy himself as Captain Kirk, but really!!!

          • Joe 2 years ago

            ‘Captain Tesla’ is already orbiting.

      • rob 2 years ago

        @[email protected]_9zhHMNTp7U:disqus my dog “basil the gorgeous german shepherd has seen the best of her days too. I’m thinking of getting another pure breed pup like her for her to train but am scared she will see her as a a replacement……..I’ve never been shepherd free…….would you like me to get you a fab dog too,,,,,,,,she is the only thing that keeps me sane and is so loving! they cost approx $1k…….but my nephew and his wife are SUPER INVOLVED in the dog world so I’d like to get 2 and give 1 to you after the puppy tear everything apart stage? sound good to you?

        • Hettie 2 years ago

          Rob that is very kind, but I have plans to get a smaller, older rescue dog after I return from a trip in May.
          Shepherds are beautiful in every way, I know, but I’m developing mobility problems, and would not be able to give a shepherd the exercise it needs. So I must decline. Thankyou for a lovely thought.

      • neroden 2 years ago

        Musk, unfortunately, can’t spend his wealth, because his wealth is not in the form of money. He does not want to give up control over the company, so he’s going to avoid selling any of the stock.

        Maybe after Tesla has actually succeeded in eliminating all combustion engines from the market, he’ll be willing to sell stock and risk losing control. But right now, he wants to hang on to as much stock as he can, so that nobody can take control away from him.

      • Joe 2 years ago

        Thank you young Hettie, your listing mirrors my thinking. Millions of extra $’s just leads to accumulating ‘stuff’…at the high end…for little if any extra gain in overall individual wellbeing.

        • Hettie 2 years ago

          Mind you, sufficient funds for a personal physio to come daily and ensure that I regain as much freedom of movement as possible – that would be something.

    • neroden 2 years ago

      This award isn’t about money for Musk. If you look at it, he doesn’t actually get any money.

      What he gets is stock. Why does he care about the stock? He wants to maintain *control* of Tesla. He doesn’t want someone else to do a hostile takeover. He wants to keep Tesla focused on its mission, not shut down or turned into a short-term-profiteering operation.

      • Mags 2 years ago

        This is very much the point. He wants the world to see he is serious about EVs and he wants to keep control of the company and maintain it’s vision, and not allow financial vultures to take it over.

  2. brucelee 2 years ago

    Imagine what he’ll do will the windfall when he created tesla out of 200 million. Im ok with it

    • neroden 2 years ago

      He’ll sit on that wealth — maybe borrow against it. He wants to maintain control, which means he doesn’t want to sell any of the stock. It’s completely illiquid for him.

  3. Ian 2 years ago

    I want Musk to be the first trillionaire, and that’s in 2018 US $ and not Zimbabwe dollars nor post-Trump dollars.

  4. Miles Harding 2 years ago

    The world needs a reboot. This may give Elon the impetus to out-do Bill & Melinda Gates.
    or…
    finance moving to Mars! 🙂

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