Post by : Mariam
Al-Faris
Elon Musk’s newly approved ten-year Tesla compensation plan could, in theory, grant him stock worth up to $878 billion if he achieves all the company’s “transformational” goals. These goals include breakthroughs in robotics, artificial intelligence, autonomous driving, and overall company performance. The board made clear that Musk would earn nothing if he failed to deliver on these objectives.
However, analysts and insiders note that even achieving a few of the plan’s relatively modest targets could trigger massive payouts, potentially exceeding $50 billion, without Tesla necessarily reaching the revolutionary milestones Musk envisions.
Targets Could Be Easier Than They Appear
Some of the sales and subscription targets outlined in the pay plan are considered surprisingly achievable. For example, reaching 1.2 million car sales annually over the next decade would unlock $8.2 billion in stock for Musk, despite being half a million fewer than Tesla’s 2024 sales. Similarly, milestones related to software subscriptions, such as 10 million users of Tesla’s Full Self-Driving system, could be met through adjustments in pricing rather than delivering full autonomous driving capabilities.
Vague Goals in Robotics and AI
Tesla’s plan also includes ambitious targets like operating one million robotaxis without a human driver and creating one million “bots.” Experts note that the definitions are broad and flexible, allowing Tesla to count remotely operated vehicles or vehicles with an operator in the passenger seat. Similarly, the term “bot” could encompass almost any AI-enabled physical product, leaving plenty of room for interpretation and easing the path to stock awards.
This flexible wording means Musk could meet several high-profile goals without achieving the radical technological breakthroughs the plan suggests.
Stock Payouts for Modest Achievements
Analysts estimate that if Musk hits just two product-related goals and Tesla’s valuation rises to $2.5 trillion, he could receive $26.4 billion in stock. Achieving three such goals at a $3 trillion valuation could boost the total payout to $54.6 billion, illustrating how the plan allows for massive rewards even without meeting the most ambitious objectives.
Despite this, investors remain cautious, expecting substance behind the spectacle of Tesla’s long-term goals.
Governance and Oversight Concerns
Tesla’s board continues to strongly support Musk, citing him as the only person capable of transforming Tesla into an AI leader. However, corporate governance experts have raised concerns about giving one individual such dominance over company leadership, suggesting that a competitive CEO market is essential for proper oversight.
The plan’s structure allows Musk to collect large sums without meeting the most challenging profit goals, which range from $50 billion to $400 billion in EBITDA—far beyond Tesla’s $16.6 billion EBITDA in 2024.
Even Tesla’s valuation targets may not be particularly difficult to reach. A 6.4 percent annual share price increase would bring the company to $2 trillion by 2035, below the S&P 500’s long-term average of 8.5 percent. Analysts note that much of Tesla’s projected value depends on future products that are not yet on the market.
Musk’s compensation plan is structured so that even moderate achievements in vehicle sales, software subscriptions, or valuation growth could result in extraordinary financial rewards, highlighting both the ambitious and flexible nature of the deal.
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