- Tesla Inc. Chief Executive Officer Elon Musk unlocked the second chunk of his big fat paycheck and can now exercise a further 1.69 million stock options
Tesla Inc. Chief Executive Officer Elon Musk unlocked the second chunk of his big fat paycheck.
The average trailing market value of the electric-car maker over six months on Tuesday rose above $150 billion, according to data compiled by Bloomberg, despite a dip in the share price of the company. That means Musk can now exercise a further 1.69 million stock options, although he must wait at least five years before he can sell them.
The options have a strike price of $350.02, meaning that if he exercised, he would reap a gain of $2.1 billion and could sell the shares immediately.
Musk received the first tranche of the reward in May when the overall market valuation of Tesla peaked at $100 billion in six months. Since then, the company’s shares have more than doubled, and the company is now worth more than the combined Toyota Motor Corp., Volkswagen AG, and Hyundai Motor Co.
Musk’s compensation plan — the biggest corporate pay offer ever negotiated between a CEO and a board of directors — involves 20.3 million options, divided into 12 tranches, which, according to Tesla’s calculations, will yield more than $50 billion for the founder if all targets are achieved.
Tesla shares in New York trading on Tuesday dropped 4.5 percent to $1,568.36, taking the increase this year to 275 percent.
For Musk to access the third tranche, Tesla must reach an estimated six-month market capitalization of $200 billion, and either post adjusted earnings of $35 billion or $3 billion before interest, taxes, depreciation, and amortization, for four consecutive quarters.
Musk, 49, is the 9th-richest person in the world with a fortune of $71.5 billion, according to the Bloomberg Billionaires List.
Tesla’s market cap needed to hit a six-month average of $100.2 billion, and either $20 billion in annual sales or $1.5 billion in adjusted EBITDA, to enter the first tranche of stock options. Tesla’s market cap had to raise another $150 billion in value and $35 billion in revenue, or $3 billion in adjusted EBITDA, to meet the next milestone.
Tesla’s market cap must hit a six-month average of $200 billion, and either $55 billion in sales or $4.5 billion in adjusted EBITDA, to qualify for the third tranche.