Can Tesla Reach a Market Cap of $650 billion? The Board of Directors Thinks So

Tesla's board of directors

The Tesla Inc. (NASDAQ:TSLA) Board of Directors has submitted a 10-year compensation plan for the company’s current CEO Elon Musk. The plan is one of incentivization. Currently, Musk takes no salary from Tesla and this plan was formulated so that Musk only receives compensation if the automotive company reaches certain milestones.

The plan was also made in the hopes of keeping Musk on as Tesla’s CEO, which Musk has, in the past, alluded to stepping down from (although he would remain still with the company, even if not as the CEO).

The milestones of the compensation plan include, among other benchmarks, Tesla reaching a market cap of $650 billion – the company currently has a market cap of just under $60 billion. That seems like a pretty big leap, but last year the company did manage to reach its last milestone market cap, which was $43 billion. And a lot can happen in ten years, after all.

The plan works like this: for every $50 billion increase in Tesla’s market cap, Musk would receive 1.69 million shares of the company, worth now about $600 million. If the company reaches its target market cap of $650 billion, Musk’s stake in the company will have increased to about 30%.

The compensation plan may also have to do with reassuring investors about Tesla, after its several missed deadlines of the Model 3 last year. A lot of work needs to go into reaching as high a market cap as is the goal of this plan; that means Tesla is going to have to go into overdrive and pump out as many vehicles as it possibly can. Surely, the board wouldn’t have made this plan if they didn’t believe that Musk could do it, right?

It’s going to be a hard goal to reach, there’s no doubt about that. But Tesla’s stock has been growing for the past month. Today, the stock is currently trading for $352.98, which puts it up $1.42, or 0.40%, from the previous closing price of $31.56.

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