Comic: Tesla Stock Rally Triggers Huge Payday for Elon Musk
By Jesse Cohen
Tesla (NASDAQ:TSLA) shares hit a big milestone on Wednesday, becoming the first $100 billion publicly listed U.S. carmaker in history.
At its current share price of $569, Tesla (NASDAQ:TSLA) is valued at $102.6 billion. Tesla shares have more than doubled in value since falling to a 52-week low of $176.99 in June 2019.
After topping the combined value of Ford and GM earlier this month, Tesla (NASDAQ:TSLA) overtook Volkswagen (DE:VOWG_p) as the second most-valuable carmaker in the world. Japan's Toyota Motor, however, remains the world leader with a market value of around $199 billion.
The $100-billion valuation triggers a $346 million payday for Tesla (NASDAQ:TSLA) CEO Elon Musk if it holds on an average basis for at least six months, the first in a series of potentially huge bonuses for Musk.
For Musk’s subsequent tranches to vest under the terms of the 2018 compensation package, the company’s market cap would have to continue to sustainably rise by $50 billion increments over the agreement’s 10-year period, with the billionaire earning the full package if Tesla’s market capitalization reaches $650 billion and the electric car maker achieves several revenue and profit targets.
If Tesla (NASDAQ:TSLA) ultimately achieves a valuation of $650 billion by 2028, Musk would be in line for a whopping $50 billion in incentive payments.
Musk receives no salary or cash bonus, only options that vest based on Tesla’s market cap and milestones for growth.
The recent rally, which has seen shares soar 221% since June, was fueled by a surprise profit for the third quarter of last year, news of production ramp-up in its China factory and better-than-expected annual car deliveries.
However, there are a few risks to watch out for in the current quarter and beyond. Tesla (NASDAQ:TSLA) is set to report its fourth quarter earnings on Jan. 29 after markets close.
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