- Tesla confirmed in a regulatory filing that CEO Elon Musk earned the first share of his massive incentive payout which is worth $700 million.
In a document filed with the Securities and Exchange Commission on Thursday, Tesla confirmed that CEO Elon Musk earned the first tranche of its massive incentive payout.
The tranche consists of approximately 1.7 million Tesla shares, which will be priced at about $775 million based on the closing market value of Thursday. Tesla shares closed Thursday at $805.81 and the options have a strike price of $350.02.
The filing of Thursday, which also set a July 7 date for the annual shareholders meeting of the company, said:
“As of the date of this proxy statement, one of the 12 tranches under this award has acquired and become exercisable, subject to Mr. Musk ‘s payment of the exercise price of $350.02 per share and the minimum holding period of five years generally applicable to any shares he acquires upon exercise.”
Musk won the first portion of his stock options to hold the company’s market capitalization at $100 billion, on a trailing average of 30 days and six months.
Tesla either had to hit trailing-four quarter sales of $20 billion or EBITDA (minus stock-based compensation) of $1.5 billion for Musk to get the tranche, according to a 2018 regulatory filing detailing the conditions for the payout.
At this point, musk is not taking a salary. As of May 1, according to FactSet, he held around 18.5 percent of the firm, a stake worth about $24 billion. By Thursday, the proxy filing revealed, Musk ‘s stake in the firm had risen to 20.8 percent — a total of 38.7 million shares, including 18.5 million used as collateral for personal debt to the CEO.
His maximum award is expected to vest over 12 tranches of various milestone conditions, hitting a market capitalization of up to $650 billion for Tesla.
In a lawsuit against Musk and members of Tesla’s Board, Tesla stockholder Richard Tornetta challenges the compensation plan. In the lawsuit, Tornetta alleged that Tesla’s board infringed its fiduciary duty by granting excessive compensation to Musk.
During the coronavirus pandemic, Tesla was forced to limit her activities to Musk’s annoyance. Musk called stay-at-home orders “fascist” on Tesla’s first-quarter analyst call.
In March, at its Fremont, California, electric vehicle assembly plant, the company wounded down to minimum basic operations after the county said it was not deemed an important business allowed to operate during the Covid-19 health orders.
Just before Tesla reopened the car plant in early May, Tesla ‘s shares tumbled more than 10 percent in a single day when Musk tweeted that the stock price was “too high,” but the shares have since recovered that loss, and then some.
Musk previously agreed to submit public statements about Tesla ‘s finances as part of a settlement with the SEC before sharing them with legal counsel for vetting. The SEC initially sued Musk and Tesla after the CEO tweeted that he had obtained funding to take Tesla private at $420 a share, without providing any facts.
After Musk was asked by The Wall Street Journal if his more recent tweet about Tesla’s share price was a joke or vetted, Musk said, “No.” SEC declined to comment on the tweet, and whether it meant Musk had violated their agreement.
In defiance of local health orders, Tesla reopened its Fremont plant on the weekend of May 9, with no consequences.