Tesla announced today a new 10 year CEO performance award for Elon Musk. The award is entirely contingent of achieving market cap and operational milestones that would make Tesla one of the most valuable companies in the world.Details of the plan according to Tesla: The performance award consists of a 10-year grant of stock options that vests in 12 tranches. Each of the 12 tranches vests only if a pair of milestones are both met.
Market Cap Milestones:
To meet the first market cap milestone, Tesla's current market cap must increase to $100 billion. For each of the remaining 11 milestones, Tesla's market cap must continue to increase in additional $50 billion increments. Thus, for Elon to fully vest in the award, Tesla's market cap must increase to $650 billion.
Operational Milestones:
To meet the operational milestones, Tesla must meet a set of escalating Revenue and Adjusted EBITDA targets (the only adjustment to EBITDA is for stock-based compensation). These milestones are even more directly aligned with shareholder value creation than those used in Elon's 2012 performance award. They are designed to ensure that as Tesla's market cap grows, the company is also executing well on both a top-line and bottom-line basis.
For each of the 12 tranches that is achieved, Elon will vest in stock options that correspond to 1% of Tesla's current total outstanding shares (1% of that amount is approximately 1.69 million shares). If none of the 12 tranches is achieved, Elon will not receive any compensation.
Tesla Press Release: http://ir.tesla.com/releasedetail.cfm?ReleaseID=1054948