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Elon Musk's Unusual Compensation Plan Isn't Really About Compensation at All

By: George Serafeim
  • Format:Electronic
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Abstract

Earlier this year, Tesla shareholders approved likely the largest compensation package ever awarded to a CEO—for a CEO who clearly doesn’t need the money. Elon Musk is already incredibly rich and also doesn’t seem particularly motivated by further wealth. So why do it? In fact, the design of the compensation plan and its announcement were not about compensation at all. They were about signaling a credible commitment to Tesla’s purpose: to become a clean energy giant that helps address climate change by transforming mobility. To get there, Musk needs not only the normal sort of investor confidence, but also for investors to buy into his radical vision for the company.

Keywords

Tesla; Elon Musk; Innovation; Investor Communication; Investor Relations; Short-termism; Long-termism; Disruption; Executive Compensation; Business and Shareholder Relations; Communication Intention and Meaning; Mission and Purpose

Citation

Serafeim, George. "Elon Musk's Unusual Compensation Plan Isn't Really About Compensation at All." Harvard Business Review (website) (May 1, 2018).
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About The Author

George Serafeim

Accounting and Management
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