Tesla’s six-month common trailing market capitalization hit $150 billion on Tuesday after a four-month run up of the automaker’s share value that theoretically unlocks a multi-billion-dollar vesting choice for CEO Elon Musk.
Once Tesla hit the six-month common trailing market cap of $150 billion, which Reuters first reported, Musk turned eligible to entry the second of 12 ranges of choices granted to him in an unprecedented pay package deal accredited by shareholders in 2018. The board should nonetheless certify the milestone earlier than the vesting choice is triggered.
The milestone was met the day earlier than Tesla is scheduled to report its second-quarter earnings.
The compensation plan consists of 20.three million inventory choice 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 expenses akin to inventory compensation). Once the board certifies every milestone, Musk is ready to purchase the 1.69 million shares at a steeply discounted value of $350.02 per share.
Based on immediately’s share value of $1,568.36, Musk might then promote 1.69 million shares for about $2.1 billion. Keep in thoughts 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 immediately’s share value. However, there is a vital caveat to all of this. Musk should maintain for at the least 5 years post-exercise any shares that he acquires upon train of the 2018 CEO efficiency award.
Musk has but to train any of those choices, in line with 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 both $20 billion in annual income or $1.5 billion in adjusted EBITDA. To meet the subsequent 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 both $55 billion in income or $4.5 billion in adjusted EBITDA.