Tesla boss Elon Musk may receive the world's biggest bonus

Image for representational purpose only

Image for representational purpose only

Electric auto maker Tesla has come out and said that its boss Elon Musk will only be paid if the company starts performing.

The maximum payout will only be made if Tesla's market value increases to at least US$650 billion, an increase of about 1,000 per cent on the company's current market capitalisation of US$59 billion. Along the way, nothing would be guaranteed - zero salary or cash bonuses. This means that Musk must bring TSLA's market cap to $650 billion over the next 10 years to get all of the vesting stock. Each of the 12 tranches vests only if a pair of milestones are both met.

Outside of the market cap milestones, there is another set of milestones that Tesla Inc will have to reach for Elon Musk to receive his vested stock. Each following cap is then achieved at $50 billion increments. Upon hitting all of the goals outlined, Musk would receive 1.69 million shares of the company, which could be worth billions. At every stage, Musk must hit either a revenue or profit target, too. These milestones are even more directly aligned with shareholder value creation than those used in Elon's 2012 performance award. This also ensures that the 36 years old will continue to lead Tesla over a very long term.

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The agreement requires Musk to remain as Tesla's CEO or serve as executive chairman and chief product officer - potentially paving the way for the company to eventually hire another CEO. Tesla said while it doesn't now intend for Musk to step away from the CEO role, the terms allow Musk to potentially focus more of his attention on key product and strategic matters.

Mr Musk " s new long-term remuneration plan, modeled after his 2012 performance award but more directly linked to the company " s performance, was unveiled after Tesla " s much-anticipated Model 3 sedan missed a series of production targets.

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.

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Everything about Elon Musk is larger than life these days, so it's fitting that the new compensation package for Tesla's visionary billionaire leader is equally audacious. Under Elon's leadership, the next phase of Tesla's development involves a number of exciting plans that will further accelerate the advent of sustainable energy. The New York Times described the compensation plan as the "most radical in corporate history".

Tesla's shareholders will vote on the proposals in March. Elon and Kimbal Musk, Elon's brother, will recuse themselves from the vote.

Tesla Inc (NASDAQ:TSLA) unveiled a new decade-long CEO performance award to the creator of the electric vehicle giant's empire: CEO Elon Musk. Out of 24 analysts polled in the last 3 months, 6 are bullish on Tesla, 9 remain sidelined, while 9 are bearish on the stock's prospects. That would give Tesla the option of hiring a different CEO in the future. Information regarding the interests of participants in the solicitation of proxies in respect of the Special Meeting will be included in Tesla's proxy statement to be filed with the SEC. Various important factors could cause actual results to differ materially, including the risks identified in our SEC filings.

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