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Elon Musk Has a New Salary. He’ll Only Get Paid If Tesla Shareholders Get Extremely Rich

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David Meyer
David Meyer
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By
David Meyer
David Meyer
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January 23, 2018, 7:04 AM ET
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Tesla chief Elon Musk will forgo all compensation if the company does not reach milestones regarding valuation and operations, the company has announced.

Tesla is worth around $59 billion today, but it’s instituting a series of a dozen targets that end up with a whopping $650 billion valuation in a decade’s time.

“Elon will receive no guaranteed compensation of any kind—no salary, no cash bonuses, and no equity that vests simply by the passage of time. Instead, Elon’s only compensation will be a 100% at-risk performance award, which ensures that he will be compensated only if Tesla and all of its shareholders do extraordinarily well,” the company said in a statement.

“For each of the 12 tranches that is achieved, Elon will vest in stock options that correspond to 1% of Tesla’s current total outstanding shares (1% of that amount is approximately 1.69 million shares). If none of the 12 tranches is achieved, Elon will not receive any compensation.”

Tesla, which has been plagued by production problems that have hampered the rollout of its Model 3 car, has recently been enthusiastically talking up future products such as a truck and a new Roadster sport car.

However, the company’s goals don’t directly relate to production, which is just as well, as Tesla has never hit its production goals anyway.

Tesla also said that the vesting of the stock options would be tied to Musk’s continued tenure as CEO or, if he decides to bring in another CEO, his occupation of both the executive chairman and chief product officer roles.

This, the firm said, provides “flexibility” to potentially allow Musk to focus on product and strategy as the company grows. Tesla said its next phase of development would focus on sustainable energy, from car batteries to solar roofs.

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