Two powerful firms just put Elon Musk’s huge Tesla pay package at risk
Two powerful advisory firms have both come out against the generous performance-based pay package Tesla announced for CEO Elon Musk back in January. While Glass Lewis and Institutional Shareholder Services are not household names among the general public, their opinion carries a lot of weight among institutional shareholders who may ultimately decide whether Musk’s pay package gets approved in a March 21 shareholder vote.
Musk’s 10-year pay package is highly unusual. If Tesla’s stock value never rises above $100 billion (right now it’s around $55 billion), Musk would receive no compensation for running Tesla over the next 10 years. On the other hand, if Tesla stock reaches a value of $100 billion—and the company either achieves earns $1.5 billion in profits or generates revenues of $20 billion—Musk would get one percent of the company’s stock, an award worth $1 billion.
Musk would get additional grants of one percent of the company’s stock at each $50 billion increment, assuming he continues hitting revenue and profit targets. If Tesla’s stock rose to $650 billion, he would get stock awards totalling $45 billion and wind up with an additional 12 percent of Tesla’s stock. He already owns more than 20 percent of Tesla stock, so in this scenario his net worth would be north of $200 billion, likely making him the world’s wealthiest man.
Source: Ars Technica