Tesla board certifies Elon Musk’s payday worth more than $700 million – ProWellTech
Tesla’s board of directors has certified a financial milestone that unlocks the first tranche – worth more than $ 700 million – of an unprecedented billion dollar salary package for CEO Elon Musk, according to a document presented Thursday at Securities and Exchange Commission.
The milestone allows Musk to purchase the first grouping or tranche of nearly 1.69 million shares with a strong discount. Tesla shares closed Thursday at $ 805.81, bringing the value to $ 775 million. Musk is able to purchase those stock options at a price of $ 350.02 per share.
“As of the date of this proxy statement, one of the 12 tranches under this award has accrued and becomes exercisable, subject to payment by Mr. Musk of the exercise price of $ 350.02 per share and of the holding period minimum of five years generally applicable to any shares acquired at the time of exercise “, reads the SEC document.
The compensation plan approved by the shareholders in 2018 consists of 20.3 million stock option assignments divided into 12 tranches of 1.69 million shares. These options will accrue in 12 increments if Tesla achieves specific targets on market capitalization, adjusted revenue and earnings (excluding certain one-off charges such as offsetting inventory).
When the board and shareholders approved the package, Musk was theoretically able to earn nearly $ 56 billion if no new shares were issued. However, Tesla sold $ 2.7 billion in convertible stocks and bonds last year, Reuters reported at the time.
To access that first tranche of stock options, Tesla’s market value had to reach a six-month average of $ 100.2 billion and $ 20 billion in annual revenue or $ 1.5 billion in adjusted EBITDA. To reach the next milestone, Tesla’s market capitalization must increase by another $ 50 billion in value and $ 35 billion in revenue or $ 3 billion in adjusted EBITDA.
The board certified the market capitalization and the revenue target. The other operating milestone of 1.5 billion Adjusted EBITDA has been achieved but is subject to formal certification by the board of directors, according to the SEC filing.
The board must certify that every milestone has been reached before Musk can exercise these stock options. To unlock each tranche, Tesla’s market capitalization will need to reach $ 650 billion.
Moss has never accepted a salary. Instead, he opted for, shareholders approved, share-based compensation plans. In a previous equity compensation plan, in 2012 Musk was assigned to stock options worth approximately $ 78 million, accrued only after Tesla achieved production targets and market values.
The 2018 CEO compensation plan not only guaranteed Musk to be part of Tesla for the next decade, but also placed an emphasis on market capitalization and revenues, not necessarily on profitability.
The annual Tesla shareholders’ meeting is scheduled for July 7, according to the document.