Mega millions

20 March 2018 By Antony Currie Follow @AntonyMCurrie

The Tesla boss could collect nearly $60 bln over 10 years. That’s excessive and surely unimportant for motivation. Yet it’s built on PR-stunt targets involving sales, EBITDA and market cap exploding 10-fold or more. For investors voting on the plan, it’s like playing the lottery.

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Tesla will hold a special meeting of stockholders on March 21 to vote on the compensation package for founder and Chief Executive Elon Musk that the board unveiled on Jan. 23.

The new plan consists of 12 stock-option grants, each equal to 1 percent of the current outstanding shares in the electric-car maker. Musk will receive a grant each time he hits a pair of milestones, one linked to market capitalization and the other to operational targets.

The first milestone would be hit if Tesla’s market cap – $53 billion as of March 19 – hits $100 billion and the company either brings in $20 billion of revenue or $1.5 billion of adjusted earnings before interest, tax, depreciation and amortization.

Each successive milestone requires an additional $50 billion increase in market value, up to $650 billion – more than 10 times the company’s current valuation. Revenue has to increase by increments up to $175 billion, with the top target for EBITDA being $14 billion.

Musk, who currently owns around 20 percent of Tesla, has to remain at the company either as executive chairman or chief executive and chief product officer to secure the awards. He also has to keep any shares for five years after exercising each award.

Context News

Tesla will hold a special meeting of stockholders on March 21 to vote on the compensation package for founder and Chief Executive Elon Musk that the board unveiled on Jan. 23.

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