Tesla CEO Elon Musk has been expanding Tesla in full force this year, and his efforts may pay off for him in a very specific way.
According to Business Insider, Musk stands to make another $3 billion in personal income if Tesla is to reach its Q3 goals. The compensation would come in the form of Musk’s fourth of 12 option tranches.
Musk’s current compensation package was developed in 2018 and includes specific incentive-pay options based on achievements in operational goals as well as market capitalization milestones.
The first piece of criteria for the fourth tranche includes a $250 billion six-month average market capitalization, which has been achieved this year.
Fox Business – 10/7/2020 – Elon Musk set to get $3 Billion if Tesla stock meets profit targets.
The average Tesla employee get about $58k a year pic.twitter.com/1dKCt19azm
— CaseStudyQB (@CaseStudyQB) October 7, 2020
Each tranche of Musk’s complex options package allows him to buy 8.44 million shares of the company at just $70 per share. And with Tuesday’s closing price at $413.98, the options package would let Musk buy $3.5 billion worth of shares, though it would only cost him $591 million. If he were to then sell those shares, he would gain about $3 billion in personal profit.
While Tesla already hit its average market capitalization mark in July and is not likely to fall from here, it will now depend on the Q3 earnings report to show that they have hit $4.5 billion in earnings before interest, taxes, depreciation, and amortization (EBITDA) over the last 12-month period. In June, the company had hit $4.42 billion in EBITDA over the last 12-month period.
Whether Musk decides to follow this route or not, this likely isn’t the end of the line for the EV company CEO, as Tesla continues to rapidly expand around the world.