Tesla CEO Elon Musk has stated that he will not take a salary from the company this year if it does not reach certain valuation milestones.
Fortune reports that Elon Musk will receive no compensation from Tesla if it does not reach valuation milestones. The company, valued at $59 billion currently, has instituted approximately a dozen milestones that place Tesla’s target valuation at $650 billion within a decade. In a statement on Musk’s compensation, Tesla said:
Elon will receive no guaranteed compensation of any kind — no salary, no cash bonuses, and no equity that vests simply by the passage of time. 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 its shareholders do extraordinarily well.” The statement continued, “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). If none of the 12 tranches is achieved, Elon will not receive any compensation.
Musk, of course, is already independently wealthy and this latest stunt from the billionaire is an attempt to portray confidence in Tesla as the company faces a number of production delays on their Model 3 cars in recent months. It was reported in November of 2017 that the company’s stock lost $5.5 billion in value following a 6-month delay of their Model. At the time, Musk assured shareholders that he was “leading from the front lines” to battle “production hell” delays. A month earlier, Musk had camped out on the roof of the company’s Gigafactory premises shortly after hundreds of employees had been let go. Musk tweeted about the campout saying, “Reason I camped on the roof was because it was less time than driving to a hotel room in Reno. Production hell, ~8th circle…”
Luckily, Musk’s compensation is not linked to the company’s production milestones which they have rarely hit on time. The company has been hyping up a number of new products such as a Tesla Truck — which the company has made a number of impossible statements about so far — and a roadster sports car. Tesla stated that the vesting of Musk’s stock option is tied to his tenure as CEO, executive chairman, and chief product officer roles, this means if Musk names a replacement as CEO in order to focus on either of the two other roles he occupies, the deal for his compensation still stands.