More CEOs want Elon Musk–style ‘moonshot’ pay packages—but comp experts are raising alarms

Core Insights - The rise of "moonshot" executive compensation plans, inspired by Elon Musk's Tesla award, ties CEO pay to ambitious performance targets over extended periods, often 5 to 10 years [1][5][10] - Rick Smith of Axon achieved significant success under a moonshot plan, becoming the highest-paid CEO in 2023 with a compensation package valued at $165 million, while the company's stock price increased over 600% from 2018 to 2023 [2][3][10] - The moonshot model contrasts with traditional CEO compensation structures, which typically include a base salary and annual bonuses, and is seen as a high-risk, high-reward approach [5][7] Company-Specific Insights - Axon's moonshot plan requires Smith to grow the company's market cap from $2.5 billion to $13.5 billion over ten years, unlocking stock options based on achieving specific valuation and operational goals [3][18] - The plan is unique as it extends eligibility for performance-based stock grants to all employees, fostering a culture of shared risk and reward [18][20] - Smith's approach to compensation has transformed Axon's corporate culture, aligning employee interests with company performance and reducing resentment towards executive pay [20][21] Industry Trends - Moonshot awards are becoming more common, with companies like Airbnb, DoorDash, and Oracle also implementing similar plans, indicating a shift in how executive compensation is structured [10][12] - The trend is particularly notable among founder-led companies and in private equity, where significant stock grants are being offered to successors and key executives [13][14] - Despite the potential for high rewards, there are concerns about the unpredictability of human performance compared to traditional investments, leading to skepticism from some investors [7][8][12]