Tesla passes USD100B, teeing up big payout for Musk

DETROIT (AP) — The meteoric rise of Tesla shares that recently pushed the company’s value over USD100 billion could turn into a supercharged payday for CEO Elon Musk.

Stock in Tesla Inc rose another 4.1 per cent on Wednesday, pushing the market value of the electric vehicle and solar panel maker past a critical milestone in Musk’s pay package. He could get a stock options package worth over USD371 million.

Tesla shares closed at USD569.56 on Wednesday, giving the company a market capitalisation of USD102.7 billion. Shares have tripled in value since last May, meaning Tesla’s market capitalisation now exceeds the value of Ford and General Motors, combined.

For Musk, hitting USD100 billion in market value triggers an option to buy 1.69 million shares of Tesla stock for USD350.02 per share. If he sells the shares, he would make just over USD371 million.

But for the options to vest, the market capitalisation has to average above USD100 billion for the next six months, and it has to be above USD100 billion for the next 30 business days, according to the compensation packages detailed in company filings with the United States (US) Securities and Exchange Commission.

Musk could get more stock payouts for every additional USD50 billion increase in market capitalisation. By meeting ambitious market capitalisation and operational milestones, he could earn more than USD50 billion over the next decade if that value hits USD650 billion.

In the third quarter, Tesla posted a surprising USD143 million profit, raising hopes that the company, which also makes battery storage units, could finally be turning the corner to profitability. But Tesla has posted mostly losses during its first decade as a publicly held company, and it lost USD1.1 billion during the first half of last year.

The company reports fourth-quarter results on January 29.

Earlier this year the company said it delivered a record of about 112,000 vehicles in the fourth quarter and about 367,500 for the full year in 2019.

Tesla, based in Palo Alto, California, had earlier projected deliveries of between 360,000 and 400,000 units worldwide.

Founder, CEO, and Chief Engineer/Designer of SpaceX Elon Musk speaks during a news conference at the Kennedy Space Centre in Cape Canaveral, Florida on January 19. PHOTO: AP