After the United States based electric car maker Tesla’s stock market valuation increase by than 200 per cent in the last three months, the founder and CEO of the company Elon Musk is inching closer to claim the first $346 million trove of options in a record-breaking pay package.
With a 9 per cent increase in share price of the company on Monday, it touched a record high. The stocks need to increase by a further 6 per cent to allow the market value of the company to reach the $100 billion mark. However that number needs to be stable for both a one-month and six-month average to make the vesting of the first of 12 tranches of options granted to Musk to buy Tesla stock possible.
One of the necessary conditions to trigger the vesting options – hitting an operational target, has already been reached by the company.
The company's market cap would have to continue to sustainably rise by $50 billion increments over the agreement's 10-year period for Musk's subsequent tranches to vest under the terms of the 2018 package. Musk will stand to earn the full package if the market cap of the company reaches $650 billion and in the condition that several revenue and profit targets are achieved by the electric car maker.
According Institutional Shareholder Services, a proxy advisor that recommended Tesla investors to reject the pay package deal for Musk at that time, if Musk manages to claim the full payoff it would be larger than any previous such packages granted to any US executives. Musk is also the majority stock owner and CEO of the space exploration company SpaceX.
Musk draws no salary or cash bonus from Tesla. He only gets options that vest based on Tesla's market cap and milestones for growth.
"This is the very definition of pay for performance," said Ian Keas, senior director at Longnecker & Associates, an executive compensation consulting firm. "But is he the only individual that could serve in that seat as CEO and deliver that value to shareholders? That's the billion dollar question."
The total payout that Musk could receive form Tesla would be comparable to what was achieved by Evan Spiegel, founder of the social network company Snap Inc, in 2017 during the company’s initial public offering that amounted to $638 million. And stock grants worth as much as $149.6 million was earned by Walt Disney CEO Robert Iger in 2018. That payout included awards related to the company’s purchase of film and television assets from Twenty-First Century Fox.
Tesla has transformed into a global leader in electric vehicles from a niche car maker riddled with production problems under the leadership of Musk. The company now owns its first factory outside of the US in China. In the electric vehicle segment, Tesla is still ahead of the more established auto companies such as Volkswagen.
The company’s market cap touched almost $89 billion last week which was more than the combined market value of General Motors and Ford for the first time. The spike happened because of a surprise profit reported by the company in the third quarter, delivery of cars from its Chinese factory and fourth quarter car deliveries that were better than expected.
(Source:www.nasdaq.com)
With a 9 per cent increase in share price of the company on Monday, it touched a record high. The stocks need to increase by a further 6 per cent to allow the market value of the company to reach the $100 billion mark. However that number needs to be stable for both a one-month and six-month average to make the vesting of the first of 12 tranches of options granted to Musk to buy Tesla stock possible.
One of the necessary conditions to trigger the vesting options – hitting an operational target, has already been reached by the company.
The company's market cap would have to continue to sustainably rise by $50 billion increments over the agreement's 10-year period for Musk's subsequent tranches to vest under the terms of the 2018 package. Musk will stand to earn the full package if the market cap of the company reaches $650 billion and in the condition that several revenue and profit targets are achieved by the electric car maker.
According Institutional Shareholder Services, a proxy advisor that recommended Tesla investors to reject the pay package deal for Musk at that time, if Musk manages to claim the full payoff it would be larger than any previous such packages granted to any US executives. Musk is also the majority stock owner and CEO of the space exploration company SpaceX.
Musk draws no salary or cash bonus from Tesla. He only gets options that vest based on Tesla's market cap and milestones for growth.
"This is the very definition of pay for performance," said Ian Keas, senior director at Longnecker & Associates, an executive compensation consulting firm. "But is he the only individual that could serve in that seat as CEO and deliver that value to shareholders? That's the billion dollar question."
The total payout that Musk could receive form Tesla would be comparable to what was achieved by Evan Spiegel, founder of the social network company Snap Inc, in 2017 during the company’s initial public offering that amounted to $638 million. And stock grants worth as much as $149.6 million was earned by Walt Disney CEO Robert Iger in 2018. That payout included awards related to the company’s purchase of film and television assets from Twenty-First Century Fox.
Tesla has transformed into a global leader in electric vehicles from a niche car maker riddled with production problems under the leadership of Musk. The company now owns its first factory outside of the US in China. In the electric vehicle segment, Tesla is still ahead of the more established auto companies such as Volkswagen.
The company’s market cap touched almost $89 billion last week which was more than the combined market value of General Motors and Ford for the first time. The spike happened because of a surprise profit reported by the company in the third quarter, delivery of cars from its Chinese factory and fourth quarter car deliveries that were better than expected.
(Source:www.nasdaq.com)
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