Elon Musk is One Board Approval Away from One other $2.1 Bn in Inventory Choices

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Tesla’s six-month common trailing market capitalization hit $150 billion on Tuesday after a four-month run up of the automaker’s share price that theoretically unlocks a multi-billion-dollar vesting possibility for CEO Elon Musk.

As soon as Tesla hit the six-month common trailing market cap of $150 billion, which Reuters first reported, Musk grew to become eligible to entry the second of 12 ranges of options granted to him in an unprecedented pay bundle authorised by shareholders in 2018. The board should nonetheless certify the milestone earlier than the vesting possibility is triggered.

The milestone was met the day before Tesla is scheduled to report its second-quarter earnings.

The compensation plan consists of 20.three million inventory possibility awards damaged up into 12 tranches of 1.69 million shares. These choices will vest in increments if Tesla hits particular milestones on market cap, income and adjusted earnings (excluding sure one-time fees akin to inventory compensation). As soon as the board certifies every milestone, Musk is ready to purchase the 1.69 million shares at a steeply discounted price of $350.02 per share.

Based mostly on in the present day’s share worth of $1,568.36, Musk could then sell 1.69 million shares for about $2.1 billion. Remember the fact that Tesla’s board licensed in May the primary milestone, which unlocked the primary tranche. So, mixed, Musk would theoretically revenue about $4.2 billion, primarily based on in the present day’s share worth. Nevertheless, there is a crucial caveat to all of this. Musk should maintain for a minimum of 5 years post-exercise any shares that he acquires upon train of the 2018 CEO efficiency award.

Musk has but to exercise any of those choices, based on SEC filings.

To entry the primary tranche of inventory choices, Tesla’s market worth needed to attain a six-month common of $100.2 billion and either $20 billion in annual revenue or $1.5 billion in adjusted EBITDA. To satisfy the following milestone, Tesla’s market cap needed to improve one other $50 billion in worth and $35 billion in income or $three billion in adjusted EBITDA.

To qualify for the third tranche, Tesla’s market worth should attain a six-month common of $200 billion and either $55 billion in revenue or $4.5 billion in adjusted EBITDA.