Anyone who thinks of Tesla, Inc. (NASDAQ:TSLA) as merely an automaker is missing the point. The company has an almost cultlike following, not only among the large majority of its customers but among investors as well. Tesla is part technology company, part Silicon Valley start-up, part artificial intelligence researcher, and part movement. Oh, and also designer and manufacturer of electric vehicles.

Tesla's storied history is inexorably tied to that of its CEO, Elon Musk. To say he is a visionary doesn't quite capture the essence of the man. Charismatic and audacious, he's considered an engineering genius and has been compared to the fictional billionaire and playboy Tony Stark, or Iron Man.

Now Musk is making his biggest bet yet on Tesla's success -- and he won't be paid at all if the company doesn't succeed.

A Tesla Model 3

Can Elon Musk guide Tesla to a huge payday? Image source: Tesla.

Boom or bust

In late January, Tesla announced a new long-term "performance award" for Musk. It's a compensation package tied to market capitalization and operational milestones that would see Tesla become "one of the most valuable companies in the world." To say the targets are ambitious is putting it mildly. The New York Times called the compensation package "perhaps the most radical in corporate history." 

In order for Musk to become fully vested in the plan, Tesla needs to grow into a $650 billion company from a market cap of about $58 billion today. The award package is also contingent on the company's achieving certain revenue and adjusted EBITDA goals. Musk "will receive no guaranteed compensation of any kind -- no salary, no cash bonuses, and no equity that vests simply by the passage of time," according to the company's press release.

This performance award will be "100% at-risk" -- meaning each goal is all-or-nothing for Musk. The package consists of a 10-year grant of stock options, divided into 12 tranches that will vest upon the fulfillment of predetermined milestones. For each of the dozen pairs of incremental targets Musk reaches, which include a $50 billion increase in Tesla's market cap, he will be awarded 1% of Tesla's shares outstanding, or an estimated 1.69 million shares. So each goal is worth $584 million at today's prices, and the overall amount potentially exceeds $55 billion. (My colleague Evan Niu covers the specific milestones in more detail.)

There are other requirements as well. Even If Musk succeeds in achieving each of these ambitious goals and the shares vest, he must hold them for an additional five years before he can sell the stock. He must also remain with the company, either as CEO, or as both executive chairman and chief product officer. This ensures that Musk's interests are aligned with those of Tesla's shareholders over the long term.

No guarantees

These are ambitious goals considering the challenges Tesla has seen thus. During the ongoing production ramp-up of the Model 3, Musk at one point said the company was "deep in production hell." In 2017, the company was hoping to build as many as 5,000 cars per week, with an eye toward achieving that goal by the end the year.

Tesla amended that timeline, pushing back the deadline to March 2018. Tesla has been experiencing more production delays and has since revised its timetable yet again. The company is looking to produce just 2,500 units per week by March, saying it is currently focusing on efficiency and quality rather than speed. The company delivered just 220 sedans in the third quarter and 1,550 in the fourth quarter of last year. 

Not the first time

Tesla said that this pay plan was modeled after Musk's 2012 compensation plan, which helped drive a "17-fold increase in Tesla's market cap in the five years after it was put in place."

While shareholders should be happy with the compensation package, not everyone believes it is achievable -- with some even going so far as to call it "delusional."

Musk's business ventures have revolutionized payments, reinvigorated space travel, and created one of the most valuable car companies in the world -- so betting against him seems like a fool's errand.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.