Tesla CEO Elon Musk qualifies for billion dollar payday
Tesla CEO Elon Musk appears to have hit milestones needed to get a $1.14bn stock award, although he’ll have to wait to cash in.
Tesla CEO Elon Musk appears to have hit all the milestones he needed to receive a stock award now worth about $US730 million ($1.14 billion), a payday that will further pad the eccentric billionaire’s vast fortune.
The electric car maker ended Wednesday with an average market value of $US100.4bn for the past six months, according to data drawn from FactSet Research.
That was the final hurdle that Tesla needed to clear for Mr Musk to receive nearly 1.69m stock options priced at $US350.02. Tesla’s stock closed at $US782.58 on Wednesday, translating into a pre-tax gain of about $US730 million if Mr Musk were able to exercise them immediately.
But Mr Musk can’t sell the newly-awarded stock for at least five years after he receives the options, according to the company’s most recent quarterly report. That filing made last week disclosed Tesla expected Mr Musk to qualify for the stock award at some point before July. Mr Musk can afford to wait before cashing in on his latest windfall, given his wealth is currently estimated at $US39 billion by Forbes magazine.
Tesla declined to comment about Mr Musk’s pay package beyond its disclosures in regulatory filings.
The Palo Alto, California, company had already hit the revenue and adjusted earnings benchmarks that Mr Musk needed to receive the first portion of one of the biggest pay packages in US. history. All told, the incentives approved by Tesla’s board in 2018 consist of 20.3 million stock options that will be doled in 12 different bundles if the company is able to reach progressively more difficult financial goals.
In order for Mr Musk to receive all 20.3 million stock options, Tesla will have to generate adjusted annual earnings of $US14 billion on annual revenue of $US175 billion coupled with a market value of $US650 billion. In the past four quarters, Tesla has reported adjusted earnings totalling $US3.6 billion on revenue totalling $US26 billion.
The company’s market value currently stands at $US145 billion, driven by an 87 per cent run-up in its stock so far this year. The surge reflects a growing belief that that Mr Musk will deliver on his promise to transform Tesla from a niche maker of luxury cars running on electricity to a mass market automaker.
Mr Musk, though, rattled Wall Street late last week when he tweeted that he believed Tesla’s stock had soared too high. The shares plunged by more than 10 per cent after he made that startling assessment, but have bounced back during the past three trading sessions.
It wasn’t the first time that Mr Musk has affected Tesla’s stock with his tweets. In 2018, he tweeted that he had lined up financing to pursue a buyout bid for Tesla, causing the company’s then-slumping shares to rally. Regulators alleged Mr Musk was misleading investors, resulting in a $US40 million settlement that also was supposed to ban him from using his Twitter account to post statements that could affect Tesla’s stock unless he got the approval of a company lawyer.
More recently, Mr Musk has created waves by railing against stay-at-home restrictions that have forced most businesses to close as part of the effort to slow the spread of the novel coronavirus that causes OVID-19. The clampdown has forced Tesla to close a San Francisco Bay Area factory that produces most of its cars.
AP
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