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Though Tesla (TSLA) stock has slowed down, if its price stays stable, the company could achieve the $100 billion average market cap for a six-month period as soon as in April or May. So, Elon Musk could get his first paycheck quite soon.
Elon Musk‘s big payday may be closer than you think. Last month Tesla (TSLA) stock closed above a $100 billion market capitalization for the first time in its history. Moreover, it has even reached the $150 billion level. That started a clock on its CEO Elon Musk receiving the first tier of a potentially massive payday. The main point was that TSLA stock price had to stay high enough in order to keep that valuation for the next six months.
If that happens, Elon Musk is allowed to unlock stock options that could net him $346 million. That payout would be just the first of 12 “tranches” of stock options that could be worth billions if the company reaches all crazy goals Musk has set. Considering his and the company’s history – we’re somehow sure that will happen pretty fast.
Elon Musk Could Qualify for First Batch in April if Tesla Stock Stays Afloat
A pay package was authorized by shareholders back in 2018. According to that, Musk can get options to buy 1.7 million shares of Tesla shares once the company has achieved the mentioned $100 billion market. Even though that happened just a few weeks ago, Musk can no matter qualify for this first batch of options already this spring. As we already said, Tesla’s stock is rocketing sky high and at the time of writing, it was $741.54, falling by 3.36%, still past that $100 billion market value.
As of Wednesday’s close, the company’s market value stood at $138.3 billion, making it the second most valuable carmaker in the world right after Toyota. If it happens that the average price of Tesla stock stays around this price the stock could achieve that $100 billion average over a six-month period as soon as April or May.
Richer than Bezos?
If that happens – Elon Musk will become the richest man in the world, surpassing current Amazon’s owner Jeff Bezos.
By the arrangement, the top target will be paid out if Tesla reaches a market value of $650 billion. That would mean that the carmaker would become more worthy than all but four US companies including Apple (AAPL), Microsoft (MSFT), Amazon (AMZN) and Google‘s parent Alphabet (GOOG). However, this will not be so simple.
The compensation agreement between Musk and Tesla is configured around 12 “tranches” of stock options, each equivalent to approximately 1% of the total number of outstanding shares at the time of the agreement. Each tranche acts as a financial gold mine that will be unlocked if the mentioned conditions are met. If that happens it becomes available to Musk once a certain number of operational milestones and stock market capitalization goals have been achieved.
That still means Tesla has to make a huge increase in its sales and profits because that’s on what operational goals are based.
Each tranche of options, once vested, gives Musk the opportunity to buy up to 1,688,670 shares of Tesla stock at a price of $350.02 per share, or the closing price at the time of the agreement.
Under terms of the package, Tesla doesn’t have to pay Musk anything – no salary, not a single stock option. However, that too might be changed.
The truth is, if the share price goes on rising through March, it’s possible that Musk will qualify for the first big payday before the end of the quarter.