It's that time again, when billionaire Elon Musk is once again close to a big payday as part of his unusual and potentially incredibly lucrative compensation plan for his job as Tesla's CEO. If all goes well with Tesla's quarterly earnings, to be released tomorrow, Elon could earn a $ 750 million bonus.
Musk's unusual payment structure was established two years ago. He receives no BASIC SALARY at all for his work as CEO. Instead, Musk's potential payout comes in the form of 12 stock option grants that are earned if multiple financial performance milestones are met. If you don't meet any of these milestones, you get nothing. If the company reaches every milestone, Musk could hypothetically end up with hair underneath $ 60 billion Tesla stock value.
The first milestone is triggered if the company maintains an average market capitalization of at least $ 100 billion for six months. This could happen tomorrow.
With Tesla's recent increase putting the company's market capitalization at around $ 140 billion, that six-month average increases much earlier than many analysts originally predicted. At the time of writing, the company's six-month average stock value is around $ 96 billion, and with the company's quarterly earnings report coming out tomorrow, some are hoping for a further raise to break the threshold. .
If that happens, the first tranche of Musk's 12 tranche payment plan would go live, giving him the opportunity to buy 1.69 million Tesla shares at $ 350.02 per share. With Tesla's current share price on the market now at nearly $ 800 a share, that would be a windfall for the CEO, valued at roughly $ 758 million (and obviously even more so if Tesla shares continue to rise) .
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Investors will be watching the Tesla quarterly report closely for signs that the recovery from the coronavirus pandemic is already happening in China, where the resumption of production at the Tesla plant in Shanghai could be increasing revenue and indicating prospects. of further recovery in the future. Here in the USA In the US, Tesla recently announced that it was placing all "nonessential" workers on leave and halting production at its US plants to help curb the spread of the coronavirus, which has also had the side effect of causing demand for new cars that they will collapse across the country. If they like what they see, and the value of Tesla's six-month stock market increases by at least another $ 4 billion, Musk will finally see his Tesla payment deal begin to pay off.