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Tesla Inc. Chief Executive Elon Musk has earned the first portion of a windfall payout tied to stock options, Tesla said in a filing late Thursday.
As part of a performance-award agreement in Musk’s 2018 compensation package, the CEO stood to receive options to purchase shares if Tesla TSLA, -1.75% reached certain benchmarks, an important one being a market capitalization averaging $100 billion for six months.
One of 12 tranches under that package “has vested and become exercisable,” Tesla said in the filing. That is now “subject to Mr. Musk’s payment of the exercise price of $350.02 per share and the minimum five-year holding period generally applicable to any shares he acquires upon exercise,” the company said.
At the end of the process, that would mean a paper profit around $775 million for Musk. Tesla shares ended Thursday at $805.81.
Musk has not taken a salary from Tesla, and “100% of Mr. Musk’s future compensation is ‘at-risk’” in the form of the remaining unvested stock options under the 2018 package and a 10-year performance-based stock option award granted in 2012, Tesla said in the filing.
Musk could earn an estimated $2.6 billion by the time the decade-long payout plan is completed. For all 12 tranches to vest, Tesla would have to reach a market value of $650 billion.
That first multimillion-dollar award would dwarf any payday for a star Silicon Valley executive. In comparison, Google’s parent, Alphabet Inc. GOOGL, -0.14% GOOG, -0.07% , disclosed in late April that Chief Executive Sundar Pichai’s total compensation for 2019 topped $280 million, thanks to stock awards tied to his promotion of chief executive of the entire company.
Tesla said last month it expected to hit that $100 billion average market cap goal within the next two months. Tesla’s market capitalization stood at about $150 billion on Thursday, which compares with a market value around $38 billion for General Motors Co. GM, -3.99% and about $23 billion for Ford Motor Co. F, -2.98% .
It was unclear Thursday whether Musk had exercised his options yet. The filing also set Tesla’s general meeting for July 7 in a museum in Mountain View, Calif., during which Tesla is asking shareholders to approve Musk’s compensation, among other issues.
Earlier this month, Musk wiped nearly $15 billion off Tesla’s valuation when he tweeted that shares were “too high.”
That led to a double-digit fall for the stock, erasing a bump from a surprise quarterly profit reported in late April.
That Twitter rant included the CEO tweeting parts of the “Star Spangled Banner” and vowing to sell his earthly possessions. “Don’t need the cash … Possession just weigh you down,” Musk tweeted.
Tesla shares have gained 93% so far this year, contrasting with losses of around 6% and 11%, respectively, for the S&P 500 index SPX, -0.21% and the Dow Jones Industrial Average. DJIA, -0.57% .
