Tesla hits target to qualify CEO Elon Musk for big payday
by The Associated Press
Market value of US$100.4 billion is translating into a pre-tax gain of about $730 million
BERKELEY, Calif. — Tesla CEO Elon Musk appears to have hit all the milestones he needed to receive a stock award now worth about US$730 million, a payday that will further pad the eccentric billionaire’s vast fortune.
The electric car maker ended May 6 with an average market value of $100.4 billion for the past six months, according to data drawn from FactSet Research. That was the final hurdle that Tesla needed to clear for Musk to receive nearly 1.69 million stock options priced at $350.02. Tesla’s stock closed at $782.58 May 6, translating into a pre-tax gain of about $730 million if Musk were able to exercise them immediately.
But 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 Musk to qualify for the stock award at some point before July. Musk can afford to wait before cashing in on his latest windfall, given his wealth is currently estimated at $39 billion by Forbes magazine.
Tesla declined to comment about Musk’s pay package beyond its disclosures in regulatory filings.
The Palo Alto, Calif. company had already hit the revenue and adjusted earnings benchmarks that 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 Musk to receive all 20.3 million stock options, Tesla will have to generate adjusted annual earnings of $14 billion on annual revenue of $175 billion coupled with a market value of $650 billion. In the past four quarters, Tesla has reported adjusted earnings totalling $3.6 billion on revenue totalling $26 billion.
The company’s market value currently stands at $145 billion, driven by an 87% run-up in its stock so far this year. The surge reflects a growing belief that Musk will deliver on his promise to transform Tesla from a niche maker of luxury cars running on electricity to a mass market automaker.
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% after he made that startling assessment, but have bounced back during the past three trading sessions.
More recently, 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.