The news of the payout approved by the shareholders for Elon Musk has recently generated much discussion. It has been quite surprising due to the enormous financial compensation for its CEO.
The commitment is a 10-year payout contingent on the company achieving a series of economic and production targets:
. Over those 10 years, the company's value must reach $8.5 trillion, and it must achieve $400 billion in operating profit (adjusted EBITDA) annually.
. In terms of deliveries, it must deliver 20 million vehicles and achieve 10 million active subscriptions to the Full Self-Driving program.
. It must also achieve milestones in new robotaxis and robotics technologies, put 1 million autonomous, driverless Robotaxi vehicles into commercial operation, and deliver one million Optimus humanoid robots.
These are truly ambitious goals, but the compensation is equally substantial. Musk currently owns 13% of the company, and achieving these objectives would increase his stake to 25%.
This milestone has sparked all sorts of opinions (both positive and negative), but shareholders voted in favor with 75% of the vote. So, no objections there.
As a curious aside, at the shareholders' meeting, Mr. Musk stated that the Optimus humanoid robot will be one of Tesla's best products, and that its influence on society will surpass that of mobile phones. I think he got a little carried away. Anyway, typical of the man.
The reality is that Chinese competitors are already hot on his heels in electric cars, and some companies are already outselling Tesla.
Furthermore, humanoid robots, by design, are more expensive than "normal" ones, and companies are very focused on their return on investment. So, I highly doubt Mr. Musk will achieve this goal.
Time will tell how the company evolves.
But the underlying question is: Does someone, no matter how capable he is, deserve to earn 10 times more than all the CEOs of the Fortune 500 companies combined?
What do you think?
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