Broadcom’s Chief Executive Officer, Hock Tan, has been promised one of the largest prospective payouts in the semiconductor industry in corporate America if the chipmaker can achieve ambitious artificial intelligence sales targets by the end of the decade.
Tan could receive as much as $616.6 million in stock awards if the company achieves $120 billion or more in AI product sales by fiscal 2030, according to an SEC filing.
The package echoes the type of performance-linked mega-deals that have made headlines for Elon Musk at Tesla, reflecting how executive pay is increasingly tethered to the AI boom. However, it dwarfs the package that’s been proposed for Musk.
Pay package tied to AI milestones
Under the terms of his new contract, Tan will be awarded 610,521 performance stock units if Broadcom’s AI revenue reaches $90 billion by fiscal 2030, worth about $205.5 million at today’s share price. Should sales hit $120 billion, the award would triple, making him eligible for roughly $616.6 million in stock compensation.
Such large awards have precedent in Silicon Valley. Musk’s 2018 Tesla package, worth up to $56 billion at the time, set a template for tying extraordinary paydays to equally extraordinary performance. Interestingly, last week, the Tesla board proposed a new performance-tied $1 trillion compensation plan for Musk.
Broadcom’s AI push
The compensation plan highlights Broadcom’s determination to carve out a bigger role in AI computing, where Nvidia currently holds sway with its graphics processors. Broadcom has been positioning its custom-made chips as an alternative for hyperscale customers seeking dedicated silicon to train and run AI models.
That strategy appears to be bearing fruit. Last week, Tan said Broadcom had secured a major new AI customer, widely reported to be OpenAI, in a deal worth more than $10 billion. The agreement is expected to drive a sharp increase in sales of custom chips in 2026 and beyond.
Broadcom’s shares have been up by 13% since it reported its fiscal results for the third quarter. AI revenue rose to $5.2 billion in the quarter, with the company expecting it to hit $6.2 billion in the fourth quarter.
Risks and governance concerns
Reaching $120 billion in AI sales by 2030, while achievable, isn’t a stroll in the park with the formidable challenge posed by competitors. Nvidia’s dominance, intense competition from rivals such as AMD, and potential supply chain bottlenecks all pose risks to Broadcom’s trajectory.
Also, performance-heavy awards are typically designed to align executives with shareholder value, but their binary nature of all or nothing can raise concerns about excessive risk-taking. If Tan were to depart before 2030, the award would be forfeited, and this highlights the retention element embedded in the deal.
However, investors appear more focused on the growth opportunity. The AI chip market is expanding at a pace not seen in decades, and Broadcom’s pivot to custom silicon has positioned it as one of the few credible challengers to Nvidia’s grip on the sector.
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Source: https://www.cryptopolitan.com/broadcom-ceo-bumper-ai-pay-day-in-2030/
