Spokesperson of Tesla, Inc. (NASDAQ: TSLA) has confirmed on Wednesday that Tesla’s shareholders have approved a proposal to award chairman and CEO Elon Musk a compensation plans potentially worth $2.6 billion.
The proposed compensation package involves no salary or cash bonus but sets rewards based on Tesla's market value rising to as much as $650 billion over the next 10 years. Musk could own as much as $55.8 billion in Tesla stock and more than a quarter of this company in the next decade if he hits all targets of the new plan.
The proposed award involves stock options that invest with 12 tranches, and Tesla’s market cap must achieve to hit $100 billion for the first tranche to vest and rise in additional $50 billion increments for the remainder, under the proposed award.
According to CNBC, the board said before the voting that the plan will likely result in increased value for shareholders even if Musk misses the targets, better ensures Musk remains at Tesla, and spurs the achievement of the Tesla Master Plan, which in turn would make Tesla one of the world's most valuable companies.
But earlier this month, proxy advisory firm Institutional Shareholder Services also recommended Tesla stockholders to reject the package, saying that this "unprecedented" award was too rich.
Tesla was valued at about $52.46 billion at Tuesday's closing price, and its shares have fallen nearly 12 percent since the pay plan for Musk was announced.