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Silicon valley billionaire Elon Musk will get no salary or cash bonuses from Tesla and all his compensation as Chief Executive of the electric auto maker will be tied to stock and operational milestones, the company said on Tuesday.
Tesla has installed a new compensation plan for CEO Elon Musk that would reward him handsomely if he can build the electric vehicle automaker into "one of the most valuable companies in the world". "Because all Tesla employees are provided equity, this also means that Elon's compensation is tied to the success of everyone at Tesla".
Tesla said: "Elon's only compensation will be a 100pc at-risk performance award, which ensures that he will be compensated only if Tesla and all of its shareholders do extraordinarily well".
The agreement, revealed Tuesday in a regulatory filing, requires that Tesla grow in $50 billion leaps, to a staggering $650 billion market capitalization.
The company now has a market value of roughly $60 billion.
To put those demands in perspective, the electric vehicle maker, based in Palo Alto, California, is worth less than $60 billion today.
As Tesla's biggest shareholder, Musk always said that he would forever remain with the company, but he did sometimes say that he was thinking about stepping back from his CEO role, which he has maintained since 2009.
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A serial entrepreneur, he has founded several companies, including rocket maker SpaceX and The Boring Company. His net worth is about $20 billion, according to Forbes.
Musk has vowed that Tesla will become "the best manufacturer on Earth", helped by a new, highly automated assembly line and a simpler design for its Model 3 sedan. Tesla says its Semi will be able to hit 60 miles per hour (96 km/h) in 20 seconds when fully loaded.
Tesla's shares were up 1 percent in premarket trading. They gained 46 percent past year.
It is also linked to a significant increase in revenue and adjusted EBITDA as seen in the chart above.
Each $50 billion increase would result in Musk receiving 1.69 million shares, which is now worth about $600 million at today's price, but if they fully vest, it would increase Musk's stake in Tesla to around 30% - making him the richest man in the world through his stake in the automaker. Elon and Kimbal Musk, Elon's brother, will recuse themselves from the vote.
Musk's new pay package still needs the approval of Tesla shareholders, who will vote on it at a special meeting in late March.
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