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Tesla won't pay Elon Musk unless ...

Elon Musk has a huge new incentive to make Tesla a bigger player in the car industry.Tesla said Tuesday that M...

Posted: Jan 23, 2018 2:39 PM
Updated: Jan 23, 2018 2:39 PM

Elon Musk has a huge new incentive to make Tesla a bigger player in the car industry.

Tesla said Tuesday that Musk won't get paid unless the company meets ambitious financial targets over the next decade.

The goal is for the electric car company to be worth $650 billion. Its current market value is just over $60 billion.

To put in perspective just how lofty a goal that is, consider that Apple, Google owner Alphabet and Microsoft are the only three American companies that have a market value over more than $650 billion.

Amazon, led by Jeff Bezos -- the world's wealthiest person -- is just a hair below that, with a market cap of about $649 billion.

If Tesla meets all its goals, which also include revenue and adjusted profit targets, Musk will receive stock worth $55.8 billion.

He'll get a chunk of stock every time Tesla hits another milestone for market value -- first at $100 billion, then every $50 billion more after that.

Until then, Musk will do without a salary, bonus or other annual stock awards from Tesla.

But he hardly needs a paycheck. Because of his ownership stake in Tesla, his investment in SpaceX and the money he made when PayPal, a company he backed, was sold to eBay, Musk is already worth more than $22 billion, according to Forbes and Bloomberg.

So can Tesla really grow to $650 billion and make Musk even richer?

Related: Tesla stock may be the new Big Short

Bulls argue that the mass-market Model 3 car will vault the company into the upper echelon of major car companies, alongside GM, Ford, Toyota and Volkswagen.

And Tesla stock has skyrocketed more than 920% in the past five years, including a 15% gain this year.

It's probably unreasonable to expect a repeat of that growth between now and 2023. But for the sake of argument, if Tesla's stock surged 920% more in the next five years, its market value would be just under $620 billion.

Tesla skeptics have pointed out that Musk has tended to be notoriously bad at meeting deadlines, which could give larger auto companies an advantage. After all, GM's Chevrolet Bolt and Nissan's Leaf are "cheaper" electric car options.

Some analysts also worry that Tesla is spreading itself too thin. It owns SolarCity, a solar panel company co-founded by two of Musk's cousins that is developing the Powerwall battery for the home.

So Tesla is trying to disrupt the auto market and the electric grid at the same time. All while he juggles SpaceX, The Boring Company and the artificial intelligence research firm OpenAI.

Related: Should Elon Musk merge Tesla and SpaceX?

Tesla seems to recognize the risk that Musk will be distracted. As part of the pay plan, Tesla said he must stay on as either CEO or executive chairman and chief product officer. That opens up the possibility that Tesla could one day hire a new CEO.

"This ensures that Elon will continue to lead Tesla's management over the long-term while also providing the flexibility to bring in another CEO who would report to Elon at some point in the future," Tesla said in a statement.

But Tesla added that "there is no current intention for this to happen."

Tesla has been a Wall Street darling, and there's a certain cult of personality among investors about Musk. So it may be a mistake to bet against him.

But even Musk has said several times in the past few years that he thought Tesla stock was overvalued based on current sales and the lack of consistent profits.

Then again, he's also claimed Tesla could be worth $700 billion by 2025.

Minnesota Coronavirus Cases

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Cases: 295001

Reported Deaths: 3535
CountyCasesDeaths
Hennepin624331107
Ramsey26238493
Anoka20851224
Dakota20527189
Stearns13245106
Washington13220111
St. Louis8141108
Scott798154
Wright720338
Olmsted639934
Sherburne552241
Clay473356
Carver443213
Blue Earth395813
Rice393335
Kandiyohi378719
Crow Wing344731
Nobles301429
Chisago29799
Otter Tail288820
Benton285847
Winona266629
Mower248523
Douglas242235
Polk238223
Morrison224027
Lyon206711
Beltrami202517
McLeod198511
Becker194015
Goodhue190628
Steele18336
Itasca179123
Isanti179016
Todd173912
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Nicollet154925
Freeborn14795
Mille Lacs145131
Le Sueur141111
Waseca135911
Cass133310
Brown131215
Pine12788
Meeker11638
Roseau11074
Hubbard107523
Martin105520
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Dodge8230
Chippewa8157
Watonwan8104
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Renville77322
Sibley7564
Wadena7476
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Rock7149
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Houston6534
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Pennington6137
Murray5623
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Swift5448
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Pope5071
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Stevens4813
Jackson4581
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Lake3916
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Wilkin3605
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Mahnomen2834
Grant2566
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Cook630

Iowa Coronavirus Cases

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Cases: 223783

Reported Deaths: 2330
CountyCasesDeaths
Polk33166333
Linn13991164
Scott1100384
Black Hawk10795134
Woodbury10255124
Johnson940036
Dubuque913491
Story674921
Dallas629057
Pottawattamie617069
Sioux366725
Webster357033
Cerro Gordo349644
Marshall346345
Clinton322840
Buena Vista302214
Muscatine282668
Des Moines282419
Warren276411
Plymouth270641
Wapello251571
Jones228413
Jasper214643
Marion202919
Lee199416
Carroll196422
Bremer192612
Henry18107
Crawford174115
Benton167418
Tama153340
Jackson143013
Delaware141021
Washington138214
Dickinson135810
Boone134811
Mahaska126127
Wright12226
Buchanan115410
Clay11504
Hardin114010
Page11144
Hamilton11009
Clayton10875
Harrison106629
Cedar106213
Calhoun10607
Kossuth10426
Floyd103916
Mills10297
Fayette102210
Lyon10188
Butler9916
Poweshiek98213
Winneshiek95812
Iowa93012
Winnebago91323
Hancock8547
Louisa84916
Grundy84611
Chickasaw8424
Sac8407
Cherokee8214
Cass80222
Allamakee79011
Appanoose77910
Mitchell7794
Humboldt7635
Shelby76111
Union7576
Emmet74924
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Franklin73421
Jefferson7062
Madison6764
Palo Alto6474
Unassigned6470
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Howard5489
Greene5170
Osceola5171
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Monona4272
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Worth3540
Lucas3226
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