Elon Musk earns $770 million performance-based payday in stock options after Tesla hits targets

WION Web Team New York, New York, United States of America May 29, 2020, 12.30 PM(IST)

Elon Musk Photograph:( Reuters )

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Tesla eclipsed $20 billion in total revenue over the last four quarters and a market capitalisation of more than $100 billion. Hence, the company disclosed, Musk now has the option to buy 1.69 million of its shares.

Tesla CEO Elon Musk on Thursday unveiled the first of 12 possible stock option awards from the compensation plan he signed in 2018 -- and it’s worth nearly $800 million.

This plan replaced one from 2012.

Tesla eclipsed $20 billion in total revenue over the last four quarters and a market capitalisation of more than $100 billion. Hence, the company disclosed, Musk now has the option to buy 1.69 million of its shares.

Tesla’s stock price was $805.81 when the markets closed on Thursday, meaning those shares are worth about $1.36 billion. Musk, however, only has to pay a $350.02 per share strike price to get them.

This implies he could net around $770 million depending on when he pulls the trigger.

At this rate, Musk can eventually wind up collecting around 20.3 million new shares of Tesla at that strike price, clearing a path for him to collect tens of billions of dollars or more.

The company originally categorised the compensation plan as an at-risk performance award that ensures Musk will be compensated only if Tesla and all of its shareholders do extraordinarily well.”

The company’s annual meeting this year will take place on July 7.

Shareholders will have seven proposals to vote on at that meeting. The first is to reelect Elon Musk and Tesla chairwoman Robyn Denholm to the board of directors, and to approve the recently-announced appointment of Hiromichi Mizuno. The second is to approve compensation for Tesla’s executives. The third is to reappoint PricewaterhouseCoopers LLP as Tesla’s auditor.

Proposal four is Tesla should start spending money on advertising — something Musk has famously avoided. 

The fifth proposal is measuring votes by a simple majority.

Proposal six is for Tesla to scrap forced arbitration.

The final proposal is Tesla preparing a report about human rights violations at the companies it buys raw materials from.