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Tesla proposes big payout if Musk meets lofty goals

Tesla proposes big payout if Musk meets lofty goals

Dan Marcec, director of content for the executive compensation and governance research firm Equilar, said the primary goal of the plan's design may not be exclusively to tell investors how Tesla plans to pay its CEO.

Tesla has allowed its extremely rich person originator, Elon Musk, a US$2.6 bn award, the greatest ever of its kind, featuring the company's colossal desire and how personally its future achievement is associated with Musk. Elon and Kimbal Musk, Elon's brother, will recuse themselves from the vote.

Tesla's plan to meet those goals was laid out in 2016 in a document Musk called "Master Plan, Part Deux". Tesla plans to expand from electric cars and SUVs to trucks - including a semi due out in 2019 - and buses.

With the new plan, Tesla effectively quietened speculation that Musk may be planning to quit as the targets require him to remain as chief executive or serve as both executive chairman and chief product officer.

Tesla's next phase of development includes "exciting plans", like expanding Solar Roof, integrating solar products with battery storage, building vehicles to cover "all major forms of terrestrial transport", advancing autonomous technology, and enabling auto sharing "so that your auto can make money for you when you aren't using it". Under a 2012 agreement, Musk's stock options that vested only if the Tesla's market cap continued to rise in $4 billion increments.

The news arrives while Tesla remains in the throes of "production hell", a phrase Musk used last summer to describe the months-long manufacturing crucible that would result in the creation of hundreds of thousands of Model 3s, the company's first mass-market vehicle. Tesla wound up reaching all of the market cap milestones and nine of the 10 operational milestones, falling short only of its goal to have four consecutive quarters with 30-percent gross margins.

When that pay package was created, the company was worth a fraction of what it is worth now, and the goals have become more highflying.

"If all that happens over the next 10 years is that Tesla's value grows by 80 or 90 percent, then my amount of compensation would be zero", the entrepreneur told The New York Times. Tesla said while it doesn't now intend for Musk to step away from the CEO role, the terms allow him to potentially focus his attention on key products and strategy. Musk is also the founder and CEO of rocket maker SpaceX and the co-founder and chairman of OpenAI, a nonprofit that researches artificial intelligence.

Tesla will be posting its Q4 and full-year 2017 financial results after the closing bell on February 7, 2018. It has reported only two profitable quarters since it went public in 2010. For months a year ago, Musk said he expected Tesla to produce 5,000 Model 3s a week by the end of 2017, a deadline he later pushed back to March. Musk now says Tesla will make 20,000 Model 3s per month at the end of the second quarter.

That hasn't dimmed investors' appetite for Tesla's stock. Tesla shares were up 1 percent to $355 in morning trading. He would also have to hold onto his shares for five years after he receives them before selling, a rare stipulation that's viewed as particularly shareholder-friendly.

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