The board of directors of American electric carmaker Tesla, on Friday, revealed a “super ambitious” pay package which could make Elon Musk the world’s first trillionaire — if he delivers some aggressive growth targets.
Musk can potentially earn 12% of Tesla’s total stocks in 12 separate packages over a decade, according to a filling with the US Securities and Exchange Commission.
How wealthy is Elon Musk?
Musk is already the world’s wealthiest person, as per Forbes’ real-time Billionaire tracker, with a net-worth of $437.8 billion. That’s ahead of Oracle’s Larry Ellison, Meta’s Mark Zuckerberg and Amazon’s Jeff Bezos.
He currently controls 13% of the company with another 6.7% in legal dispute. If the plan is approved, Musk would control at least 25% of the company, on the condition he stays around for seven more years.
The proposal is indicative of Musk’s growing control over the automaker, something he has consistently asked for. That’s despite an ongoing legal battle over his 2018 pay package of $56 billion.
Musk’s attention has been stretched thin — besides his role in Tesla, he is also the CEO and founder of the SpaceX space technology firm and the owner of the X social media platform. He formerly worked as an advisor to US President Donald Trump, but left the administration in May.
Retaining a ‘pioneering, ambitious and unique CEO’
The pay structure, titled “A Super Ambitious Incentive Package for a Pioneering, Ambitious and Unique CEO,” was approved by the board on Friday and will seek shareholder approval in November.
Analysts say the package is meant to keep the controversial billionaire from leaving Tesla and incentivize him to turn the company into an AI and robotics powerhouse.
The package immediately gives Musk 96 million shares of restricted stock worth over $31 billion which cannot be sold for five years.
The filing said that Musk has threatened to leave Tesla more than once and the board expects the AI talent would follow him.
“Musk also raised the possibility that he may pursue his other interests and leave Tesla if he did not receive such assurance,” the board said.
What will it take for Musk to become a trillionaire?
To attain the full reward, Musk must take Tesla to a market capitalization of “at least $8.5 trillion by 2035,” the filing said. Tesla’s current market capitalization is just over $1 trillion.
Apart from this, there are specific goals on share price, operating profits and production.
Dan Coatsworth, investment analyst at AJ Bell said the plan could set a bad precedent in corporate governance and questioned if Musk was worth that much.
“One minute Tesla’s board is wondering if Elon Musk is a liability to the company given his outspoken views and political distractions, the next they’re effectively saying ‘pick a number, any number’ to lock him in for as long as possible,” Coatsworth was cited by the Reuters news agency as saying.
“Surely Musk should be fighting for his job, not Tesla’s board fighting to keep him?”
Taufiq Rahim, a SpaceX investor and principal at 2040 Advisory, expects the plan will be approved by shareholders, come November. “But it raises larger social questions about the outsized gains going to relatively few capital holders, which is likely not sustainable and will face public pressures,” he told Reuters.
Edited by: Saim Dušan Inayatullah
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