NEW YORK  - Elon Musk’s latest pay deal is crazy enough to get the nod. Tesla’s founder and chief executive could collect nearly $60 billion over 10 years, according to the incentive plan the electric-car maker’s board unveiled in January. That’s excessive and surely unimportant for his motivation. But for investors voting on the plan on Wednesday, it’s as easy to accept as a free ticket to play the lottery.

That’s because the package is full of PR-stunt targets involving sales, EBITDA and market value exploding 10-fold or more. All in, Musk has to hit a dozen of them to reap the maximum payout: share grants totaling 12 percent of the company. If he gets the full whack, it’ll mean other investors have benefited to the tune of nearly $600 billion, by the company’s analysis.

He already owns around a fifth of Tesla stock, which would be worth roughly $100 billion if he achieves all the goals directors have laid out for him. Another $56 billion, the upper limit by Tesla’s reckoning, is unlikely to push him noticeably harder. Musk seems driven more by overcoming real-world challenges than the resulting financial success.

Musk still needs to match his undoubted vision and entrepreneurial flair with a scalable mass-production model. And even meeting just some of his targets will bring performance awards in the billions, an absurd level of CEO compensation by public-company standards.

If he fails, though, he won’t cost other shareholders anything more at all. In fact, it’s possible the compensation package is mainly a tease for them. Most were already hanging onto Musk’s bumper as he sped past his previous 10-year targets in half the time. Now they have another chance to join Musk’s lottery syndicate, as long as they are willing to share up to a tenth of their winnings with him.

As financial bets go, that’s a lot less to give up than the traditional 20 percent “carry” a private equity firm might charge. Even shareholders who don’t put themselves among the Tesla faithful may see little reason to say no.

CONTEXT NEWS

- Tesla will hold a special meeting of stockholders on March 21 to vote on the compensation package for founder and Chief Executive Elon Musk that the board unveiled on Jan. 23.

- The new plan consists of 12 stock-option grants, each equal to 1 percent of the current outstanding shares in the electric-car maker. Musk will receive a grant each time he hits a pair of milestones, one linked to market capitalization and the other to operational targets.

- The first milestone would be hit if Tesla’s market cap – $53 billion as of March 19 – hits $100 billion and the company either brings in $20 billion of revenue or $1.5 billion of adjusted earnings before interest, tax, depreciation and amortization.

- Each successive milestone requires an additional $50 billion increase in market value, up to $650 billion – more than 10 times the company’s current valuation. Revenue has to increase by increments up to $175 billion, with the top target for EBITDA being $14 billion.

- Musk, who currently owns around 20 percent of Tesla, has to remain at the company either as executive chairman or chief executive and chief product officer to secure the awards. He also has to keep any shares for five years after exercising each award.

(Editing by Richard Beales and Amanda Gomez)

© Reuters News 2018