Tesla’s Revised $1 Trillion Compensation Package Dials Down Elon Musk’s Aspirational Goals
In a significant proposal, electric vehicle manufacturer Tesla has unveiled a colossal $1 trillion compensation package for CEO Elon Musk, with key performance indicators that some consider to be toned-down versions of ambitious targets he had previously set for the company.
Contrary to the portrayal by Tesla’s board of directors in the annual proxy statement, this proposed remuneration is not depicted as a means to create “the most valuable company in history.” Instead, the focus lies on setting milestones that could transform Tesla significantly over the 10-year period covered by the deal.
Despite the need for shareholder approval at an upcoming November meeting, it’s evident that Tesla’s dedicated fanbase might vote in favor due to past support for Musk’s compensation packages.
Let’s delve into the achievements Musk needs to attain to reap the full benefits from this package:
Musk had often declared that Tesla would produce 20 million electric vehicles annually by 2030, a goal that seems less ambitious in light of the current proposal. The new compensation structure now aims for a total of 20 million vehicles over the 2035 horizon, given current sales figures and production rates.
One of Musk’s most debated promises about Tesla involved one million robotaxis on roads by 2020, a goal that has yet to be realized. The revised compensation plan now includes a goal for “1 million Robotaxis in Commercial Operation,” though with some conditions attached.
Tesla requires a “daily average aggregate” of one million robotaxis “commercially operated by or on behalf of [Tesla] over a consecutive three-month period, as part of a transportation service.” The company defines a Robotaxi as any vehicle utilizing its Full Self-Driving software to offer rides, including customer-owned vehicles – another long-promised but unfulfilled feature.
Musk’s aspirations for Tesla’s future revolve around Optimus, a humanoid robot being developed by the company. Musk has claimed that Optimus could account for up to 80% of the company’s future revenue. The new compensation plan asks Musk to deliver one million “bots” total, with the term covering any robotic or physical product with mobility using artificial intelligence manufactured by or on behalf of Tesla (excluding vehicles).
The board acknowledges Optimus’ potential as Tesla’s most promising product and its ability to benefit humanity. However, they admit that commercialization plans are still in development, giving Musk until 2035 to reach the one million mark.
Lastly, Musk is tasked with securing 10 million active subscriptions for Tesla’s Full Self-Driving (FSD) software – an ambitious goal considering that executives have only recently mentioned an adoption rate in the “teens.”
Beyond product goals, Musk must help Tesla achieve a staggering $8.5 trillion valuation to unlock the full value of the compensation package and potentially become a trillionaire himself. Previously, Musk had envisioned Tesla surpassing Apple and Saudi Aramco combined in value, although more recent statements suggested an even higher target.
The new compensation plan also requires Musk to boost Tesla’s annual earnings to an astounding $400 billion – a significant leap from last year’s earnings of around $17 billion.
Lastly, the board has requested two notable commitments from Musk: developing a succession plan and ensuring his involvement in politics diminishes in a timely manner. These conditions could potentially lock Musk to Tesla for at least 7.5 years and restrict his political activities.
In summary, the new compensation package presents ambitious targets for Tesla’s growth over the next decade under Musk’s leadership, some of which appear to be modified versions of previously announced goals.
