The meteoric rise of Tesla Inc shares that recently pushed the company’s value over US$100 billion could turn into a supercharged payday for CEO Elon Musk.
Stock in Tesla rose another 4.1 percent on Wednesday, pushing the market value of the electric vehicle and solar panel maker past a critical milestone in Musk’s pay package. He could get a stock options package worth over US$371 million.
Tesla shares closed at US$569.56 on Wednesday, giving the company a market capitalization of US$102.7 billion.
Photo: AP
Shares have tripled in value since May, meaning Tesla’s market capitalization now exceeds the value of Ford Motor Corp and General Motors Co, combined.
For Musk, hitting US$100 billion in market value triggers an option to buy 1.69 million shares of Tesla stock for US$350.02 per share. If he sells the shares, he would make just over US$371 million.
However, for the options to vest, the market capitalization has to average above US$100 billion for the next six months, and it has to be above US$100 billion for the next 30 business days, according to the compensation packages detailed in company filings with the US Securities and Exchange Commission.
Musk could get more stock payouts for every additional US$50 billion increase in market capitalization. By meeting ambitious market capitalization and operational milestones, he could earn more than US$50 billion over the next decade if that value hits US$650 billion.
In the third quarter, Tesla posted a surprising US$143 million profit, raising hopes that the company, which also makes battery storage units, could finally be turning the corner to profitability.
However, Tesla has posted mostly losses during its first decade as a publicly held company, and it lost US$1.1 billion during the first half of last year. The company reports fourth-quarter results on Wednesday.
Earlier this year the company said it delivered a record of about 112,000 vehicles in the fourth quarter and about 367,500 for the full year last year.
Tesla, based in Palo Alto, California, had earlier projected deliveries of between 360,000 and 400,000 units worldwide.
Analyst Dan Ives of Wedbush Securities offered an upbeat view of Tesla in a research note on Wednesday.
“In our opinion, the company has the most impressive product roadmap out of any technology/auto vendor around (which the market cap reflects vs. its traditional auto competitors) and will be a ‘game changing’ driving force for the EV (electric vehicle) transformation over the next decade with Model 3 front and center,” Ives said.
US President Donald Trump offered praise for Musk in a CNBC television interview aired on Wednesday.
“You have to give him credit,” Trump said.
“He’s one of our great geniuses, and we have to protect our genius. You know, we have to protect Thomas Edison and we have to protect all of these people that — came up with originally the light bulb and — the wheel and all of these things. And he’s one of our very smart people.”
Additional reporting by AFP
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