Elon Musk’s Unusual Compensation Package

Last month, Tesla Inc. surprised observers with the announcement of CEO Elon Musk’s new 10-year compensation package. Contrary to the vast majority of compensation agreements, Musk’s is entirely performance-based. In essence, this means that if Tesla fails to achieve certain annual financial milestones, Musk will receive no remuneration for his work. The milestones are not moderate either. Primarily, the benchmarks center on Tesla’s market value. The first annual target is a market value of $100 billion, and the targets increase by $ 50 billion yearly, capping off at $650 billion. In addition, Musk will be required to meet a dozen revenue and adjusted profit goals in order to receive his full compensation. However, Musk’s potential reward is also quite sizeable. Should he successfully meet all of Tesla’s milestones, he will be given 1.68 million Tesla shares, which would represent approximately 1% of the company. In total, this stock could be worth…

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