Апреля 23 2018

Tesla shares rise as stockholders approve Elon Musk's $2.6bn compensation plan

Апреля 23 2018, 09:02 | Guillermo Bowen

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Tesla (TSLA) shareholders on Wednesday voted to approve a massive pay package for Chief Executive Elon Musk, created to ensure the iconic leader remains at the electric-car maker for the next 10 years. If the plan's accepted and he turns Tesla into both a mass-market automaker and one of the world's largest companies, he'll become perhaps the richest man on the planet.

"For each of the 12 tranches that is achieved, Elon will vest in stock options that correspond to 1% of Tesla's current total outstanding shares (1% of that amount is approximately 1.69 million shares)".

The vote passed despite strong opposition from two proxy advisory firms: Institutional Shareholder Services and Glass Lewis.

Under the new plan, Musk will earn one-12th of the options every time Tesla hits a pair of goals: one tied to its market value and the other linked to either revenue or earnings excluding certain charges.

The award, worth $2.6 billion is at current valuations, will increase if Musk manages to clear 12 hurdles along the way to a $650 billion valuation - majority in $50 billion increments. But it requires Musk to reach a dozen targets and achieve tremendous growth that would make Tesla one of the most valuable companies worldwide in order for him to cash in. That's an astronomical sum, compared to what other US executives make.

Musk and his brother, Kimbal, both members of the board, have recused themselves from the vote. You could spread solar systems here that would give you more energy than you need or could need. But if Tesla's market value balloons just as the payment plan hopes, those stock awards could be worth almost $56 billion, according to a public filing.

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The vote comes amid a slump in Tesla's stock performance.

Tesla values the all-or-nothing package at $2.6 billion at the current stock value.

Large stock awards can be costly for investors in two ways: They increase a company's expenses and they dilute the stakes of existing shareholders. Additionally, a series of executive exits in the past year has left Tesla without a clear No. 2 - a potential concern even if Musk stays front and center.

But, there won't be a salary or cash bonus involved.

Shares in the company rose 3.42 per cent to $321.18 following the news. Musk also is the founder and CEO of rocket company SpaceX and co-founder of OpenAI, a nonprofit that researches artificial intelligence. Now, its rockstar CEO will have further incentive to stay with the company.

If Musk were to leave, it would be a huge blow, the company has repeatedly told investors in regulatory filings. A spokesman for Tesla declined to comment. Several top executives have left the company lately, calling into question what Tesla would do if Musk chose to do something else. "Instead, Elon's only compensation will be a 100% at-risk performance award, which ensures that he will be compensated only if Tesla and all of our stockholders do extraordinarily well".

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