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Electric vehicles maker Tesla denies further Model 3 production issues

Electric vehicles maker Tesla denies further Model 3 production issues

For Musk to fully vest the stock options, the Palo Alto-based company has set a 10-year market capitalisation target of United States dollars 650 billion.

That ambitious target implies Tesla stock will grow by 1,000 per cent over a decade, or about 27 per cent per year, a feat achieved by only a handful of major U.S. companies recently, including Amazon.com, Priceline Group and Domino's Pizza.

The proposal also seals Musk's involvement in the company in leadership roles.

Tesla's problems with battery production at its Gigafactory in Sparks, Nevada, are worse than it had acknowledged, CNBC had reported earlier in the day, citing some company employees.

Here are the highlights of the new compensation structure of Tesla's CEO, as mentioned in the company's press release.

The performance award consists of a 10-year grant, of stock options, which will vest in 12 tranches. Revenue and EBITDA must increase.

For vesting to occur when the milestones are met, Musk must remain as Tesla's CEO or serve as both Executive Chairman and Chief Product Officer, in each case with all leadership ultimately reporting to him.

More news: European climbers stuck on Himalayan peak; rescue planned

The proposal is pending shareholder approval.

A column by Business Insider journalist Mathew Debord has called the proposal "delusional". Now, the man who was good at making lots of money during his younger years is risking his pay over the next decade by betting on his company's stock.

Since the new compensation plan excludes vehicle production targets, it won't provide Musk any motivation to achieve production targets.

Each time the company's value increases $50 billion, Musk will receive a slice of the metaphorical money pie. Tesla said in its January 3 update on deliveries and production that it expected to end its first quarter at a weekly production rate of about 2,500 Model 3 units - an aggressive target that would likely more than double Tesla's combined Model S and X weekly production. And although Musk will be making California minimum wage throughout this time, as required by law, that's certainly a drop in the hat compared to the potential billions of dollars that would be made in stock options.

CNBC's full report on the problems impacting Tesla is well worth a read and can be viewed over here.

The world's current richest person is Amazon's CEO Jeff Bezos, whose net worth is about United States dollars 108 billion.


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