Tesla has dangled a big carrot on a stick in front of Elon Musk. The electric car firm announced a 10-year performance award program for its CEO on Tuesday, which pays out as long as Musk meets specific performance goals and remains in a high-level leadership position.
The reward pays out in 12 stages, and each one depends on achieving both market cap growth and certain operational milestones. For each of the 12 stages, Musk will receive one percent of the company’s current total outstanding shares. Musk will receive the full payout if Tesla’s market cap grows to $650 billion, around $600 billion more than it is today.
There’s just one big catch, though — Musk has to remain as either Tesla’s CEO or, failing that, serve as executive chairman and chief product officer at the same time.
“I believe one of the biggest positives is that it will help remove any concerns that Musk will leave Tesla anytime soon,” Chuck Jones, a technology analyst, wrote in a Forbes story. “He is also the CEO and lead designer at SpaceX and co-founder and chairman of OpenAI, so this lessens the likelihood he will step back from Tesla.”
Musk has already said as much. In April 2017, during his longform interview at the TED 2017 conference in Vancouver, he said he’d be at Tesla for the long haul:
“I intend to stay with Tesla as far into the future as I can imagine and a lot of exiting things that we have coming,” Musk said then. “We’ve got obviously the Model 3 that’s coming soon. We’ll be unveiling the Tesla Semi Truck.”
It’s a big win for watchers concerned that Musk may leave. With several projects in the pipeline, including a hyperloop tunnel built using The Boring Company, a manned mission to Mars in 2024, and a brain-computer interface in the form of Neuralink, some may be concerned that Musk would drop Tesla to focus on his other goals.
The Tesla Model 3.
It wouldn’t be the first time that the prospect of Musk leaving has arisen, either. In a Wired article in July 2017, just after the $35,000 Tesla Model 3 vehicle launched, writer Alex Davies said that Musk had “better things to do” than run Tesla, calling for him to focus his energy elsewhere.
“He could focus on some of his other grand ideas for changing the transportation world: his rockets, tunnels, and hyperloops,” Davies wrote in the Wired story. “Simply put, he possesses far too much talent and ambition to run an automaker.”
The reward package is based on Musk’s previous compensation structure, put in place back in 2012. Under that scheme, Musk was awarded if the company market cap grew in $4 billion stages, and the company delivered on certain production and development stages. The plan ultimately paid out for reaching every market cap milestone and nine out of 10 operational milestones.
Assuming the plan gets approved by a shareholder meeting in late March, Musk just got one massive reason to stay.
