Love him or hate him, it seems that Elon Musk, the trillion-dollar man, is set to remain at the wheel of EV maker Tesla (TSLA) for at least the next decade.
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Jed Dorsheimer, analyst at William Blair, said Tesla’s new incentive plan – revealed on Friday – signals that “he is here to stay and win.”
Incentivized Musk
He added: “If he can pull off the long-term goal of an $8.5 trillion market cap company, this would be an incredible achievement and aligned with shareholders. Tesla shareholders will be excited today that Musk is incentivized for the next decade and can potentially be awarded 25% ownership.”
On Friday, the Tesla board put forward a new package that could see Musk earn up to $1 trillion in total compensation if he hits certain ambitious milestones over the next 10 years.
The payments will be in the form of incremental expansion of his Tesla shares, giving him more voting rights. This will mark the biggest corporate compensation in history.
Some of the key targets include Musk leading Tesla to progressively expand its market capitalization to $8.5 trillion from its worth of $1.09 trillion as of Friday. He would also have to oversee the automotive company selling millions of its cars, robotaxis, and AI-powered robots.
This is despite the Tesla share price being battered this year as a result of increased competition in the EV market from China, tariff impacts, slumping sales and the hit to the company’s reputation by Musk’s flirtation with President Trump and right-wing politics.
Boardroom Pressure
What the company does have in its favor, however, is a huge ecosystem of businesses from humanoid robots, see below, to energy storage.
Not every analyst, however, reacted positively to the pay deal. “It beggars belief. Is one person worth that much? Musk is a visionary, has endless energy, and the confidence to succeed – all qualities required in leadership,” said Dan Coatsworth, investment analyst at AJ Bell. “But he also presides over a company that has lost its edge, is being overtaken by rivals, and whose brand has been tarnished by Musk’s actions outside of Tesla. Surely Musk should be fighting for his job, not Tesla’s board fighting to keep him?”
He also questioned whether the pay proposal sets a new precedent for boardrooms across America. “Will they think it’s ok to add a zero or two onto the end of current remuneration packages? It all seems a tad excessive and a symptom of poor corporate governance,” he said.
Adam Sarhan, chief executive of 50 Park Investments in New York, added: “While bold compensation tied to performance is nothing new, the sheer scale here sets a new bar for CEO incentives and will dominate boardroom debates everywhere.”
Is TSLA a Good Stock to Buy Now?
On TipRanks, TSLA has a Hold consensus based on 14 Buy, 14 Hold and 8 Sell ratings. Its highest price target is $500. TSLA stock’s consensus price target is $309, implying an 11.72% downside.
