Wedbush analyst Dan Ives released a research report on Tesla Motors' latest incentive plan.
The report states: "In the recently filed proxy statement, Tesla Motors' board members are requesting shareholder approval for a long-term incentive plan for Musk. This plan is designed to retain Musk and incentivize him to continue in his current leadership role, centered around a new stock plan where Musk would only receive compensation if he achieves 'exceptional financial returns.'"
The report indicates that "in terms of product development, Tesla Motors needs to deliver 20 million vehicles, achieve 10 million active Full Self-Driving (FSD) subscriptions, deliver 1 million Optimus humanoid robots, and put 1 million autonomous taxis into commercial operation. For Tesla Motors, which is advancing into new markets such as robotics and artificial intelligence, these targets set extremely high standards for Musk and his team. Despite requiring substantial investment in research and development (R&D) and future product deployment, Tesla Motors must still achieve highly challenging adjusted EBITDA targets—with the first target being $50 billion in adjusted EBITDA, ultimately requiring $400 billion in adjusted EBITDA over four consecutive quarters, thus balancing aggressive investment in growth projects with expanding net profits."
The analyst states, "Most of these incentive conditions were already included in our 'three-step checklist' proposed in early July. At that time, we believed Tesla Motors' board must take action to ensure Musk remains with Tesla Motors through 2030. Now, the foundation is in place to support Musk in accelerating his current strategy and seizing future opportunities. This move is a key step to ensure Musk continues as CEO at least until 2030—as Tesla Motors is currently entering one of the most important phases of its growth cycle, with the future of autonomous driving and robotics technology within reach."
The analyst adds, "We maintain our 'Outperform' rating on Tesla Motors stock, with a price target remaining at $500."