RAHUL SHARMA DEBT CONNECT IN MANCHESTER, UK,
Tesla CEO Elon Musk has unlocked the first of 12 possible stock option awards from the massive compensation plan he signed in 2018, and it’s worth nearly $800 million. The company disclosed on Thursday that Musk now has the option to buy 1.69 million of its shares because Tesla eclipsed $20 billion in total revenue over the last four quarters and a market capitalization of more than $100 billion — the first in a series of tandem milestones Tesla must hit for Musk to realize the full value of the plan.
Tesla’s stock price was $805.81 when the markets closed on Thursday, meaning those shares are worth about $1.36 billion. But Musk only has to pay a $350.02 per share “strike price” to get them, according to the agreement, or a total of about $591 million — meaning he could net around $770 million depending on when he pulls the trigger.
If Tesla’s stock price keeps going up, and the company hits additional revenue goals, Musk could 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.
Musk does not collect a salary at Tesla, and the company originally categorized the compensation plan — which replaced one from 2012 — as an “at-risk performance award” that “ensures [Musk] will be compensated only if Tesla and all of its shareholders do extraordinarily well.” Musk is worth around $40 billion on paper already, but has downplayed his personal wealth. He repeatedly points out that he reinvests a lot of the money he makes back into his own companies and is relatively cash poor. But he also borrows against his Tesla holdings and puts that money into his companies as well, so the more of the company he owns, the more money he could have access to in the future.
Confirmation of the award was tucked inside Tesla’s annual “proxy filing,” a document that lays out what shareholders should expect at the company’s annual meeting. This year that meeting will take place on July 7th, according to the filing. While many companies have been holding online-only shareholder meetings during the pandemic, Tesla says it will hold an in-person event at the Computer History Museum in Mountain View, California in addition to a webcast. The company is leaving room for that to change, though.
“[W]e will continue to monitor public health and travel safety protocols required or recommended by federal, state and local governments. If necessary or advisable to protect our personnel and stockholders, we will change the date, time, location and/or format of the 2020 Annual Meeting,” the company writes.
