But Smith had started getting antsy around 2016, as he was approaching three decades at the company, Axon compensation committee chair Hadi Partovi told Fortune. Smith was talking more seriously to the board about his succession plan, who was next to lead the company, and what he would do next. Partovi knew Smith could make a lot more money if he launched a startup than if he made Axon worth 10 times as much under his previous comp plan. 

“This is when I realized we had a real problem,” said Partovi. 

Smith thrives in high-risk, high-reward environments, so the Axon board granted Smith a near carbon copy of Tesla CEO Elon Musk’s moonshot pay plan but on a much smaller scale. The challenge to Smith was to grow the Taser stun gun and body-camera maker 10-fold over a 10-year performance period starting in 2018. From a base of $2.5 billion, Smith had to increase the company’s market cap by $1 billion to unlock each new tranche of stock options, for a total of 12 tranches and a market cap of $13.5 billion. In addition, Smith had to hit eight revenue-based operational or eight adjusted-Ebitda-based goals. During the decade he was supposed to work on achieving those goals, he would get almost nothing—no bonuses or other incentives, and his salary was about $31,000 a year.

“In full candor, my wife was against me taking on the challenge, as she saw it as just too risky,” Smith wrote in a letter to investors in 2023. But Smith blew through all the goals and each of the 12 tranches in five years—half the time the board gave him—making Smith the highest-paid CEO last year with compensation valued at $165 million. The stock price grew more than 600% between 2018 when the board offered him the moonshot and 2023. After he unlocked the 12th tranche, Smith negotiated an $88 million reduction on his next performance plan (which will keep him at Axon until at least 2030 with a goal of driving the stock to $943.75) and directed it be granted to the lowest-paid workers at Axon, showering them with surprise stock grants based on their years of tenure at the company.

“The best is yet to come,” Smith wrote to investors in his letter this year. 

What is a moonshot pay package?

Smith shooting the moon—twice, potentially—represents a resurgent breed of executive compensation that has captured the imaginations of a growing number of CEOs. Moonshot wanderlust initially kicked into high gear after Elon Musk’s groundbreaking 2017 award from Tesla, once valued as high as $56 billion before it was twice rescinded owing to a legal challenge. Moonshot grants, not to be confused with an outsize stock grant known as a “mega grant” for its sheer size, tie CEO compensation almost entirely to aggressive, seemingly impossible performance targets, explained Eric Hoffmann, vice president and chief data officer at comp consulting firm Farient Advisors. CEOs don’t get the awards unless they hit specific valuation hurdles and operational goals, he said, and the performance periods are typically five, seven or 10 years, rather than the more standard three-year period.

“It should be difficult to get these awards,” said Hoffmann. “You have to create a lot of value in order to earn these kinds of awards.”

Traditional CEO pay packages include a base salary, an annual cash bonus, and a longer-term equity incentive award often based on time and performance goals. According to compensation data firm Equilar, median compensation among S&P 500 CEOs was $17.1 million in 2024, up nearly 10% over the year prior. Moonshot awards, however, upend the traditional compensation model while also bucking the trend of billionaire tech founders like Amazon’s Jeff Bezos, Google’s Larry Page, and Meta’s Mark Zuckerberg, who all held large equity stakes and focused on making them more valuable, noted Hoffmann. The key distinction is that those founders built wealth by focusing on increasing the value of their existing equity stakes, while taking minimal or no compensation, rather than seeking massive equity grants on top of their founder stakes, said Hoffmann. The moonshot model is a departure—seeking both founder equity upside plus additional compensation awards.

“This way of wealth building is different than what was used during the dotcom era,” he noted.

The upside to the moonshot is an enormous payout and a growing slice of company ownership if an executive can deliver transformational growth, but investors aren’t always wild about them, and moonshots don’t come without significant risk, said Todd Sirras, a managing director with consulting firm Semler Brossy who has advised clients on these deals. Companies are “willing to bet all of these ungodly amounts of money on one person thinking, ‘That’s the right machine we need for the factory,’” said Sirras. But there’s a fundamental flaw in this approach because people are unpredictable—unlike factory equipment.

“Human beings are terrible machines,” Sirras told Fortune. “They’re emotional. Their attention gets divided thinking about what airplane they’re going to buy. It’s more risky to invest in a human being than it is to invest in a machine because human beings break in different and unpredictable ways.”

Until now, the moonshot offers have been almost exclusive to founder-CEOs and almost always established pre-IPO, said Sirras. Semler Brossy’s database of about 80 moonshot awards includes dozens issued during the SPAC IPO boom of 2020 and 2021 that are now “dead in the water” because companies failed to meet their valuation targets, he added. 

With fewer IPOs in recent years and fewer moonshots, there are about 16 that exist among large publicly traded companies—and even fewer CEOs who have achieved maximum payouts, including Smith and Musk, according to research from Claire Kamas, a senior data analyst at Farient Advisors. Other companies that have awarded the grants include Airbnb, DoorDash, Oracle, ServiceNow, and RH, formerly known as Restoration Hardware, Kamas found. But the high-profile nature of the awards and the eye-popping figures associated with them are pushing board-level compensation committees that negotiate CEO pay to prepare for conversations about similar packages. 

Farient has gotten queries from compensation committee chairs who are already preparing for how they will address the situation when the CEO comes to them about a moonshot plan. In one case, the CEO isn’t a founder but a manager hired to run the company, Hoffmann noted. He isn’t a fan of moonshot awards, particularly in cases where CEOs already hold significant ownership stakes and control over their companies. 

“From a firm perspective, it is our view that these plans are generally not in the best interests of the organizations, the stakeholders, and shareholders in these companies,” said Hoffmann. “To me, a lot of these feel like a lottery ticket, a winner-take-all.”

Despite the risk, Sirras sees these awards rising in popularity again, and he sees new trends emerging: Founders are granting moonshots to their “anointed successors,” he said. Real estate platform Opendoor Technologies this month granted a moonshot potentially worth $2.8 billion and an 11% slice of the company to new CEO Kaz Nejatian. Sirras said that award looks to be the first of its kind, and the board likely offered it to Nejatian because of a blessing from Opendoor’s cofounders, Eric Wu and Khosla Ventures’ Keith Rabois. Wu and Rabois returned to the board alongside Nejatian’s hiring and invested $40 million of equity capital into the company. 

Sirras said the same trend seems to be occurring in private equity. For instance, when founders Henry Kravis and George Roberts of KKR stepped down, the firm in 2021 granted co-CEOs Joe Bae and Scott Nuttall 1.2 million shares of KKR Holdings, valued at about $75 million, as part of their promotions. That same year, Apollo Global Management granted copresidents Jim Zelter and Scott Kleinman the potential to earn more than $860 million in stock. Zelter was promoted to president in 2025, and Marc Rowan remains CEO.

In addition to controlling founders who are planning leadership transitions and “founder-anointed successors,” the new wave of awards will likely also go to leading-edge executives in scenarios in which founders are making investment decisions, said Sirras. The arms race for talent between OpenAI and Meta and the reported compensation packages Zuckerberg has offered come to mind, he added. 

“From a design perspective, the magnitude is mind-boggling,” said Sirras. He compared it to the Jurassic Park film series. “Danger increases exponentially the closer these awards get to the general executive population,” Sirras wrote in an email. Alongside moonshots for founder-anointed successors and non-successors with a major capital investment he deems “inside the T. rex fence,” the rise of “awards in non-founder companies means the dinosaurs have escaped and are heading to the mainland,” Sirras wrote. 

The awards can also prompt investors to revolt. Business payments company Corpay awarded CEO Ronald Clarke 850,000 performance-based stock options valued at $55.6 million in 2021. The award had stock price hurdles of $350 and $400 and Clarke got no long-term equity grants in 2020, 2022, and 2023. In 2024, the comp committee canceled 300,000 stock options subject to the $400 hurdle and modified the criterion for 550,000 stock options subject to the $350 hurdle to require that Corpay hit a closing stock price at or above $350 for at least three trading days by the end of 2024. Clarke achieved the modified hurdle on Oct. 23, 2024. Corpay told investors the change was meant to “align Mr. Clarke’s realized pay with that of shareholders who benefited from the increased stock level over $350 before the modification, but prior to the modification the stock had not closed above $350 for 10 consecutive days, which was the pre-modification hurdle.” In other words, the board made it simpler for Clarke to earn the stock options by reducing the target from 10 consecutive trading days above $350 to just three trading days, a hurdle he cleared shortly after the change. 

The stock didn’t hit $400 until February 2025 and is currently trading at just under $300. The company’s 2025 Say-on-Pay vote—a thumbs-up, thumbs-down nonbinding vote on executive pay—only got support from 53.5% of votes cast. Over the past 14 years, the Russell 3000 index saw average support of about 91% for pay programs. 

Corpay did not respond to a request for comment.

Axon Enterprise moonshot

At Axon, Smith’s moonshot deal differs from Musk’s in another key way: It’s open to Smith’s direct reports on down to line workers at Axon, making employees eligible for a version of Smith’s moonshot deal. Workers could give up some salary, put some of their pay at risk, and work to hit revenue targets. Plus, every employee in the U.S. got a grant of 60 performance stock units that vested according to the same milestones in Smith’s award—a move almost unheard of in corporate America. No one other than Smith was able to essentially give up all their pay, said Partovi, mostly because Smith was independently successful enough that if he didn’t cut it and got nothing, he had enough of a cushion. Roughly $75 million in employee compensation was locked up as at-risk pay so employees could take part in the moonshot. 

“I really think that was a driver behind why the company grew so fast,” said Partovi. “Any element of infighting was gone—everybody was suddenly like, ‘We’re all in this together.’”

Smith’s 2023 award went through a significant negotiation process where Partovi heard directly from shareholders about everything they didn’t like about the first plan so he could debug it. The board also attempted to legal-proof it against the type of challenge that Musk’s moonshot faced, prompting one of the compensation committee members who had socialized with Smith to resign from the committee. The board also changed the vehicle type from performance options to restricted stock, added in speed brakes that would keep Smith at Axon, and made it more difficult for Smith to hit the last few tranches. Partovi said he addressed every question from shareholders about misalignment in the plan during the board’s negotiation process with Smith. 

Ultimately, Partovi credits the moonshot deal with transforming the corporate culture around shared risk and high reward with a version of a high-stakes compensation plan rolled out to everyone at the company. In his view, it helped to eliminate dynamics where direct reports and general employees resent outsize pay for the chief executive, he said. 

“The big thing is, the CEO is taking a risk in giving up his pay, and you don’t want it to turn out to be shareholders win and the CEO wins or shareholders lose and the CEO still wins,” said Partovi. “I don’t know if grants like Rick’s make sense for everybody, but they strongly make sense for Rick Smith at Axon.”