Tesla Inc chief executive officer Elon Musk on Tuesday qualified for a payout worth an unprecedented US$2.1 billion, his second jackpot since May from the electric-vehicle maker following its massive stock surge.
Tesla’s stock on Tuesday fell 4.5 percent in New York trading to US$1,568.36, eroding a recent rally that has elevated the company’s market capitalization to almost US$300 billion, larger than any other automaker.
Despite Tuesday’s stock dip, and importantly for Musk’s personal finances, Tesla’s six-month average market capitalization for the first time has reached US$150 billion. That triggers the vesting of the second of 12 tranches of options granted to the billionaire in his 2018 pay package to buy Tesla stock at a discount.
Photo: Reuters
Musk, who is also majority owner and chief executive officer of the SpaceX rocket maker, receives no salary.
Even with Tuesday’s decline in Tesla’s stock, its six-month average market capitalization rose, thanks to the stock’s strong rally in the past few months.
In early May, Musk’s first tranche vested after Tesla’s six-month average stock market value reached US$100 billion.
Musk has already achieved targets related to Tesla’s financial growth that are also required to vest the latest options tranche.
Each tranche gives Musk the option to buy 1.69 million Tesla shares at US$350.02 each, less than one-quarter of their current price.
Musk would theoretically be able to sell the shares related to the tranche that vested in May and the current tranche for a combined profit of US$4.2 billion, or almost US$2.1 billion per tranche.
Musk’s first tranche was worth about US$700 million in May, when it vested, but its value has since increased along with Tesla’s stock price.
The median compensation for Tesla employees last year was about US$58,000, according to a company filing.
Tesla’s stock has surged more than 500 percent over the past year as the company increased sales of its Model 3 sedan.
Following higher-than-expected second-quarter vehicle deliveries, some investors believe Tesla might report a profit in its second-quarter report yesterday after the bell.
That would mark four consecutive profitable quarters, a first for Tesla and a key hurdle for it to be added to the S&P 500 index.
Analysts on average expect a US$240 million loss for the quarter, according to Refinitiv. A month ago, analysts expected a loss of almost US$340 million.
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