(Bloomberg) -- Billionaire Elon Musk set a series of aggressive growth targets at Tesla Inc. that would make the electric carmaker one of the world’s most valuable companies within the next decade, and assured shareholders he’ll stick around by tying his compensation to those goals.
The unprecedented pay package proposes Musk won’t get paid unless his company’s stock rises, further tying the 46-year-old chief executive officer’s personal wealth to that of shareholders. It envisions a staggering increase in market value to $650 billion that would put Tesla in the league of tech giants like Google parent Alphabet Inc. and Microsoft Corp., now more than 10 times its size. Revenue would expand to $175 billion, ahead of General Motors Co.
The move assures investors that Musk will lead Tesla through its next phase of rapid growth despite his many other commitments and interests. He is also the CEO of Space Exploration Technologies Corp. and has embarked on several other ventures including OpenAI, Neuralink and the Boring Co.
Under the plan, which requires shareholder approval in March, Musk’s pay is tied strictly to stock performance and profit. He will receive no salary or bonus. A 10-year grant of stock options vests in 12 tranches that are linked to market capitalization in $50 billion increments, starting at $100 billion. There are also milestones tied to revenue and adjusted earnings before interest, taxes, depreciation and amortization, Tesla said in a statement.
Musk, who is already Tesla’s biggest shareholder, has a net worth estimated at $21.5 billion, according to the Bloomberg Billionaires Index. The new pay plan would add as much as $55.8 billion to that total. The company said that figure was theoretical, given the likelihood of additional employee stock awards, as well as the possibility of mergers or raising new capital.
“While Tesla has no way of predicting how much dilution there will be, some amount of future dilution is a certainty,” the company said in a filing.
The agreement requires Musk to remain as Tesla’s CEO or serve as executive chairman and chief product officer -- potentially paving the way for the company to eventually hire another CEO. The plan is aimed at ensuring that Musk “will continue to lead Tesla’s management over the long-term while also providing the flexibility to bring in another CEO who would report to Elon at some point in the future,” the company said.
Tesla, based in Palo Alto, California, has more than 33,000 employees worldwide and recently launched the Model 3 sedan, a more affordable electric car that is the linchpin to the company’s efforts to reach the mass market and profitability. Tesla, which has struggled to ramp up production of the car, no longer includes vehicle output targets in Musk’s proposed compensation plan.
The company, whose stated mission “is to accelerate the world’s transition to sustainable energy,” also sells its batteries to utilities seeking to integrate renewable forms of energy like solar and wind onto the grid. That product line is expanding to include a solar roof product for homeowners. Musk’s personal brand as a futurist is deeply intertwined with the identity of the company, which has legions of fans and devoted customers but has yet to make an annual profit.
Musk’s previous compensation plan was also tied to stock performance and vehicle development targets set in 2012. The carmaker was valued at $59.1 billion at the close of trading Monday. The shares have jumped 13 percent since the start of the year.
A $650 billion market capitalization would make Tesla the fourth-most valuable U.S. company as of today, behind Apple Inc., Microsoft and Alphabet, and would exceed Volkswagen AG, the world’s biggest carmaker, by almost sixfold.
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