If Hock Tan, the CEO of Broadcom, achieves the goal of reaching $120 billion or more in AI product sales in fiscal year 2030, he is expected to receive up to $616.6 million in stock rewards, making it an extremely lucrative potential gain in the business world. This large reward plan tied to performance is reminiscent of Elon Musk's similar arrangement at TSL, though on a much larger scale.

According to the terms of his new contract, if Broadcom's AI revenue reaches $90 billion in the fiscal year 2030, Tan will receive approximately 610,521 performance stock units, which is worth about $205.5 million at the current stock price. If sales reach $120 billion, this reward will triple, making him eligible for approximately $616.6 million in stock compensation. There have been similar precedents in Silicon Valley's history, such as the TSL reward plan that Musk received in 2018, which was worth up to $56 billion, and last week the company's board also recommended a new trillion-dollar performance-linked reward plan.

Broadcom's incentive program indicates its determination to expand its role in the AI computing field. Currently, Nvidia dominates this area with its graphics processors; however, Broadcom is participating in this competition by promoting alternative solutions through customized chips for hyperscale customers. Just last week, Tan announced that Broadcom has secured an important new AI client, reported to be OpenAI, with a deal worth over $10 billion. This agreement is expected to trigger significant growth in custom chip sales in 2026 and beyond. Since the release of the third-quarter financial report, Broadcom's stock price has risen by 13%, with AI revenue soaring to $5.2 billion this quarter and expected to reach $6.2 billion in the fourth quarter.

Certainly, achieving $120 billion in AI sales by 2030 is no small feat, and Nvidia's advantages, fierce competition from rivals such as AMD, and potential supply chain bottlenecks are all challenges on Broadcom's path. Additionally, performance-based rewards are typically designed to align executives with shareholder value, but their "all or nothing" nature can raise concerns about excessive risk-taking. If Tan were to leave before 2030, he would forfeit his rewards, highlighting a strategy for employee retention. However, investors seem more focused on growth potential. The AI chip market is expanding at a pace not seen in decades, and Broadcom's shift to custom chips makes it one of the few companies capable of challenging Nvidia's industry dominance.

Of course, this article is only for information sharing and does not constitute any investment advice. Meanwhile, what does everyone think of this incentive mechanism? In such a market environment, is it an opportunity or a challenge for companies? Feel free to leave a message to discuss.