The economy may be in dire straits for most, but not so for Elon Musk. The Tesla CEO just received a major payday––and it happens to be the largest of its kind.
Due to yet another in a long string of stock surges for his electric car company, the entrepreneur qualified to receive a $2.1 billion payout. Tesla’s average six-month market capitalization of $150 billion triggered the second of 12 tranches that will be unlocked as the company hits specific financial milestones per Musk’s 2018 compensation agreement. Musk earns no salary as Tesla’s CEO. The $2.1 billion figure is the single biggest payment ever dispersed to an executive.
Though the California-based automaker has seen its stock fluctuate a bit since this most recent rally, its value remains around the $300 billion mark. This makes it not only more valuable than Ford and GM combined but has also allowed it to unseat Toyota as the world’s most valuable carmaker, something the marque achieved at the beginning of July.
Musk’s financial arrangement with Tesla means he can buy shares in the company at the steep discount of $350 apiece. As of publication, its regular market stock value stands at $1,612.20. Each of the first two tranches awarded Musk 1.69 million shares in Tesla with many more likely to come his way should its sharp upward trajectory continue. If Musk were to sell the shares from both tranches at the current price, he would make a profit of about $4.2 billion. For a little context, the median income of Tesla employees is $58,000 per year, according to recent financial disclosures.
So far, each successive tranche has proven substantially larger than the last. The first one, which was dispersed in May, initially totaled $700 million before dramatically increasing in value as Tesla’s stock continued to skyrocket. The company’s stock has grown more than 500 percent over the past year even as the Covid-19 pandemic has wreaked unprecedented havoc on the American and global economies.
The carmaker just reported its fourth straight quarter of profit, a major milestone, especially considering the state of the health crisis and a reeling automotive market. Whether Musk is clear the third tranche remains to be seen, but it’s fair to say that few will bet against it.