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article imageOp-Ed: Musk Tesla CEO deal — $70 billion over 10 years breaks the mould

By Paul Wallis     Jan 23, 2018 in Business
Palo Alto - Not a bad bit of pocket money for a decade, you say? Elon Musk is perhaps the easiest target on Earth for critics, and this pay deal is likely fodder for more criticism, but – What if he’s worth it?
The Musk pay deal is unique. As a permanent CEO, Musk will have to do the full decade in office and achieve financial performance goals to get that $70 billion. There are no “production targets”, meaning set parameters in this deal. Stockholders apparently like it, raising the price of Tesla a bit in the process.
What’s interesting about this deal in numbers terms is that the $70b is more than Tesla’s market capitalization. That’s very new in CEO packages.
It’s also interesting insofar as the very diverse Tesla, which includes a whole raft of types of products, tech, and let’s face it, a lot of baggage in hype and heat from critics, is no easy horse to ride. Musk is no hothouse flower in the market, and he’s been a sort of monastic advocate of anything and everything to do with Tesla since it began. Few people COULD do that job, and none have the direct coalface experience.
If you’ve been keeping track of Musk and Tesla, it’s a real wild ride in many ways. Tesla has received a lot of criticism for an image which includes successes and clangers. Musk has never really dodged criticism, but the Tesla brand has had its ups and downs.
Check out the core Musk businesses, projects and their lineage:
Space X – The Great Bird of the future, it’s extremely ambitious, and has been a sort of patchwork of achievements, if still thundering ahead.
Tesla cars – The controversial, but popular Tesla range has had more flak than a bombing raid and has been charging its way to polarizing fans and trolls very efficiently for years.
Musk’s Mars Colony idea – This is no joke, nor is it some sort of tech jerk-off. It’s a complex but viable idea in many ways. The future? Ask Musk. (Excuse extremely irritating typo in my article, linked.)
Hyperloop – A major leap in the direction of efficient transport, but a big ticket item to deliver.
OK, see a pattern? Musk is a definitive Big Ideas Guy. That makes him either a prophet or a pretty heavy load of basic logistics and operational issues, or both. Tesla gets a lift out of Musk’s projects, whether directly related or not. He’s a Jobs/Gates analogue, in some ways.
The brand also gets a lift out of some rather thankless but necessary market realities. The good news for any Big Ideas Guy is that the car and vehicle industry is now in a state of flux as old fossil fuel cars are phased out by all major manufacturers. This is where Big Ideas Guys thrive and few have as much experience as Musk.
Tesla is a well-placed, technically advanced company which isn’t going to get buried by the new tech. They specialize in batteries and other related tech, too, so there’s plenty of collateral to play with.
There’s other tech coming on the market, too, notably supercapacitors, which can deliver massive, voltage-economic. power to electrical drive and power systems. Who’s better placed to develop that tech in the car industry? The Little Ideas Guys in the car industry who’ve been holding on to petrol tech like an umbilical cord for decades? Hardly.
What will this do to CEO packages? Guess.
So – Do you pay $70b for a guy who can at least claim to be able to ride the big waves, or confine yourself to a wading pool with the more conventional, and certainly less demanding, market herd?
See also – This is a very innovative CEO package. It’s a good deal if it works for both company and Musk. Don’t be too surprised to see more deals like this in the pipeline. The question is always going to be whether the guy is worth the risk, and we’re about to find out.
This opinion article was written by an independent writer. The opinions and views expressed herein are those of the author and are not necessarily intended to reflect those of
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