Elon Musk presently doesn't have a compensation package at Tesla, and one needs to get worked out as soon as possible. Here's what I think that compensation package should be.
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Elon Musk Needs a New Compensation Package
Elon Musk owns several hundred million shares of Tesla stock, with each share worth about $248.48 today. Hist total net worth is listed at $251.3 billion today, according to Forbes, with most of that coming from Tesla and SpaceX. I'm uncertain the exact number of Tesla shares Elon owns due to so many different numbers being found online. We'll likely find out that number whenever Tesla does a filing online.
You could divide $248.48 into $251.3 billion, and you get just over 1 billion shares of stock - however, I don't think Elon owns that many and this net worth does include SpaceX.
This is a huge net worth, and Elon Musk could certainly ride off into the sunset and sell all his shares of Tesla stock. He's not going to do that, however, and instead, he is doubling down on Tesla. He made a bold prediction recently, that Tesla, with exceptional execution, would surpass Apple and Aramco in market cap.
This statement reveals to me that Elon is motivated to keep Tesla moving forward and growing, and that he needs a new compensation package. If Tesla gets to a $5 trillion market cap, Elon Musk will be richer in stock value, but he won't have gained anything additional. Doing this will require immense growth in EVs, FSD, Energy, and Tesla Bot.
Compensation packages are given to CEOs, to generally grow a company beyond what it is currently at, and to reward shareholders with an increase in value. If a CEO can do this, they will be rewarded handsomely.
With Elon Musk not having a compensation package right now, besides the appreciation of the value of his Tesla shares, what kind of compensation package should he get?
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Elon Musk's New Compensation Package
Amy, from X, also known as @_SFTahoe, had some good things to say about Elon Musk and her call for him to get a new compensation plan.
She had this to say:
This market cap only happens if Tesla executes perfectly on existing programs, FSD, Optimus, 25K EV, Energy, and continues to disrupt other industries. What will your current investment be worth if Tesla’s market cap is as big as Aramco and Apple?
Win/Win/Win. Win for humanity. Win for Elon Musk (Mars is expensive). Win for Tesla Investors.
A lot of exceptional execution has to happen for Tesla to get to a 5 trillion dollar market cap, however, Tesla already has a lot of momentum and cash on its hands. I don't think this will be as difficult as the Model 3 ramp days, or the early days when Tesla almost went bankrupt.
Amy says that Elon Musk has "big, insanely ambitious goals" and he is motivated to accomplish things people tell him he can't do.
I think Elon Musk's biggest goal is colonizing Mars, which is going to take thousands upon thousands of Starships to do so. That is going to cost a lot of money. I'm guessing trillions of dollars, but I honestly don't know the cost or the number of Starships needed - I can only guess that it is thousands.
Elon Musk is no longer paid by Tesla - his compensation plan expired. He needs a new one.
New Compensation Plan
Elon's new compensation plan is going to dilute Tesla stock. That is, new shares are going to have to be issued. This will increase the total float, but only if Tesla reaches certain goals. I think the goals should be as follows:
- 1.5 trillion market cap: Another 50 million shares
- 3 trillion market cap: Another 50 million shares
- 5 trillion market cap: Another 100 million shares
- 7 trillion market cap: Another 100 million shares
- 10 trillion market cap: Another 200 million shares
This plan will about double his current existing number of shares and is clearly very simple. There would likely be revenue and profit targets associated with these "tranches" or production targets of EVs, Megapacks, and Optimus humanoid robots, but I wanted to keep it simple as an example.
If Tesla reaches these goals, I don't think Elon Musk will need to be compensated by Tesla again or even need to work there, and can focus full time on colonizing Mars.
The question is, who is going to create this compensation package and how much dilution of Tesla stock will occur?
In Other Tesla News: Elon Musk Says, "He Is Utterly Wrong" On Ross Gerber's Comment That "Less and Less People Are Buying Tesla Cars Because of Elon's Behavior"
What do you think about Elon Musk getting a new compensation plan at Tesla? Will this dilute Tesla stock? Does Elon Musk even need it if Tesla continues to grow as a company? How much money will it cost to colonize Mars?
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Hi! I'm Jeremy Noel Johnson, and I am a Tesla investor and supporter and own a 2022 Model 3 RWD EV and I don't have range anxiety :). I enjoy bringing you breaking Tesla news as well as anything about Tesla or other EV companies I can find, like Aptera. Other interests of mine are AI, Tesla Energy and the Tesla Bot! You can follow me on X.COM or LinkedIn to stay in touch and follow my Tesla and EV news coverage.
Image Credit: iStock Photo | Britannica
Article Reference: Amy, SFTahoe
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