Tesla CEO Elon Musk's new unconventional 10-year compensation package would pay him based on a market cap target and operational milestones. If he doesn't hit them, he gets nothing. (Stephan Savoia/AP Photo)

Tesla outlined a potentially massive -- and massively unconventional -- compensation plan for its unorthodox CEO on Tuesday, setting a series of ambitious growth targets that, if various conditions are met, could theoretically net Elon Musk as much as $55.8 billion over the next decade, launching him to the top of rankings of the world's richest people and dwarfing the size of past CEO stock and options grants.

The unusual package is based entirely on performance, guaranteeing no salary and no bonus, and requires Musk to reach aggressive market capitalization and financial goals in order to be paid. He would also have to hold onto his shares for five years after he receives them before selling, a rare stipulation that's viewed as particularly shareholder-friendly.

Yet compensation experts said the biggest message Musk's new pay plan may be designed to send is not just that Tesla intends to take an unusually performance-driven approach to paying its CEO. It's that the company has galaxy-size ambitions for its growth and aims to rival the planet's largest tech companies over the next decade. Musk would only receive the full payout if the company reaches a market capitalization of $650 billion, a more than ten-fold increase over its current $59 billion market cap, a future valuation that clocks in just under the size of Microsoft's value today.

Dan Marcec, director of content for the executive compensation and governance research firm Equilar, said the primary purpose of the plan's design may not be solely to tell investors how Tesla plans to pay its CEO.

"The message is we're really aggressive with our goals and we want to make it to the level of Facebook and Microsoft and Google and Apple with our market size," he said.

Alan Johnson, an executive pay consultant based in New York, also said the plan's design -- and Musks's continued involvement -- could be a message to those concerned the electric car maker has set "audacious" production goals it doesn't meet.

"Maybe the main purpose, or a big purpose, is to say 'we're going to grow into an adult company that makes a lot of money and [Musk] is going to be here," Johnson said. "He's not going to be off doing five other things.' "

Tesla, which declined to comment beyond its news release and regulatory documents, said in a filing that "our aspirations may appear ambitious to some, and impossible to others, and that is by design. We like setting challenging, hard-to-achieve goals for ourselves, and then focusing our efforts to make them happen. This is why we based this new award on stretch goals and why we gave Elon the ability to share in the upside in a way that is commensurate with the difficulty of achieving them."

The news arrives while Tesla remains in the throes of "production hell," a phrase Musk used last summer to describe the months-long manufacturing crucible that would result in the creation of hundreds of thousands of Model 3s — the company's first mass-market vehicle.

Nearly six months later, the company has yet to emerge at the other end, the result of "robot calibration issues" at the Fremont, Calif., auto assembly plant and other challenges at Tesla's "Gigafactory" battery plant in Nevada.

Those issues have dramatically delayed the Model 3 rollout, so much so that even ardent fans of the company have begun to wonder about Tesla's long-term viability and Musk's ability to set realistic goals. For months last year, Musk said he expected Tesla to produce 5,000 Model 3s a week by the end of 2017, a deadline he later pushed back to March. The company has now pushed that number back to June.

In the filing, board members also acknowledged that it is their "strong belief that the best outcome for our stockholders is for Elon to continue leading the company over the long-term," addressing open speculation from some investors that Musk, who also runs Space Exploration Technologies Corp. and is known for his eclectic endeavors, might not lead Tesla for the long haul. To remain eligible for the pay plan, the filing states, Musk must continue as Tesla’s CEO or serve as both executive chairman and chief product officer "with all leadership ultimately reporting to him," the filing says, though it offers the option of bringing in a CEO who would report to Musk.

Musk has vast personal wealth. Last year, according to Forbes, Musks's net worth passed $20 billion for the first time, helped by the rising value of SpaceX, of which he owns more than half.

Musk would also need to meet a series of revenue and earnings  goals, as well as a staggering growth in market capitalization, in order to get paid. The plan offers no guaranteed cash or equity payouts just by staying in the job; instead, he will receive a 10-year grant of stock options that vests in 12 installments. (A Tesla filing says Musk is subject to minimum wage requirements under California law but has never and does not accepted his salary.) To receive the first one, he will have to increase the company's market cap to $100 billion and meet one of the operational goals; for each additional "tranche" of options, Tesla's market cap must increase by an additional $50 billion increment and he must meet another of the financial targets.

If Musk meets all of the goals, doesn't sell any of his shares and Tesla does not issue any more shares that would dilute the share price -- something Johnson called "impossible" -- Musk's total haul could be worth $55.8 billion, according to a company filing. Yet Tesla called that figure "theoretical," as future dilution over time is a "certainty," whether because it issues more shares or due to mergers or acquisitions.

Still, meeting even some of the goals could mean a massive payout for Musk. And even at the amount Tesla valued its options grant today -- $2.6 billion -- other large recent CEO awards look diminutive in comparison. Musk's grant is far larger than the $376 million long-term equity grant awarded to Apple CEO Tim Cook in 2011, or the $91 million options grant that former Expedia (and current Uber) CEO Dara Khosrowshahi received in 2015.

A notable difference, however, is that those stock or options grants were not all tied to meeting performance targets, as is the case with Musk's.

"We rarely, if ever, see 100 percent performance-based compensation," Equilar's Marcec said. While companies have been linking more and more of executives' pay to how well they perform, just under 54 percent of the average compensation package is tied to performance, well under the 100 percent in Musk's new plan.

The new plan mirrors a grant Tesla gave Musk in 2012, albeit at a much larger scale, which also put 100 percent of his pay at risk. One key difference, however, is that Musk won't immediately be able to sell his shares once he vests in them. Rather, he'll have to wait five years, which should help prevent any efforts to make short-term boosts to the stock price.

"His holding period clearly links his personal wealth to the company's long-term success, which is what shareholders want to see," said Rosanna Landis Weaver, an executive compensation expert for the nonprofit As You Sow.

Though she questions the massive size of the grant, the way it's designed is a good sign, she says: "I wish more executives were paid in this fashion."

With additional reporting by Peter Holley.

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