Tesla shareholders on Wednesday approved a compensation package for CEO Elon Musk that could net him close to $56 billion, so long as he meets incredibly ambitious milestones. The pay package was approved by a “wide margin,” according to reports, despite pushback from some analysts.
The approval gives Musk an additional $2.6 billion in stock options—about 12 percent of the company’s shares—and means he’s expected to stick around with the automaker for the next decade.
The stock options are split into 12 tranches, which begin once Tesla hits a market cap of $100 billion (it’s currently valued at roughly $54 billion). From there, we reported earlier this month, it increases in $50 billion steps, up to a lofty $650 billion.
If Tesla manages to achieve that ambitious target—which would make it one of the most valuable companies in the world—Musk could net a payday valued at around $55.8 billion. If he fails to hit any of those targets, he’d earn nothing. (Musk is currently worth about $20 billion, according to Forbes, and doesn’t accept a paycheck currently as it is.)
CNBC reported Tesla’s board felt the plan could not only shower Musk with a windfall, but should increase the value for shareholders “even if Musk misses the targets.”
Tesla boosters don’t appear concerned by the bumpy start to production of Tesla’s all-electric sedan, the Model 3. Tesla expected to produce 5,000 Model 3s per week by the end of the first quarter in 2017, but delayed that target to the end of the second quarter. It’s now targeting 2,500 per week by the end of Q1, but some analysts expect it might even miss that.
That’s no concern, one investor told CNBC.
“Investors aren’t bothered by the fact that Tesla lost more money than people thought they would, or have had continued Model 3 misses,” Loup Ventures managing partner Gene Munster told CNBC. “They see a bigger opportunity over the long-term, and that opportunity is figuring out the trifecta between energy capture, storage and use.”
Tesla has roughly 450,000 Model 3 orders to fulfill, though, and the automaker might require a fresh influx of cash from investors before the year is up. At some point—sooner than later, one imagines—investors will want to see the Model 3 being produced at a rapid clip, generating the profit Tesla believes will come.