Elon Musk Ahead of Pace for $1.6-Bil­lion Tesla Mo­tors Pay­day

The Economic Times - - Around The World - CALEB MELBY & ALI­CIA RITCEY

$7.2b 11.2b 15.2b 19.2b 23.2b 27.2b 31.2b 35.2b 39.2b 43.2b Ev­ery time Tesla hits a pair of mar­ket cap and op­er­a­tional goals, he gets stock op­tions Elon Musk is ahead of sched­ule to get a huge pay­day from Tesla Mo­tors even though he earns less than $40,000 in an­nual salary.

In 2012, the elec­tric car­maker awarded its bil­lion­aire founder 5.27 mil­lion op­tions tied to mile­stones in­clud­ing de­vel­op­ing new ve­hi­cles and ramp­ing up pro­duc­tion. While he was given un­til 2022 to meet the goals, he has al­ready achieved 50% of them, ac­cord­ing to a proxy state­ment is­sued on April 15. That means he may get $1.6 bil­lion well be­fore then.

Un­der the 2012 stock plan, Musk earns 1/10th of the op­tions ev­ery time Tesla hits a pair of goals -- one tied to its mar­ket value and an­other to the com­pany’s oper­a­tions. While he’s achieved seven tar­gets tied to the growth of Tesla’s mar­ket cap­i­tal­i­sa­tion, he’s only hit five of 10 op­er­a­tional ones.

That’s been good enough for him to re­ceive half of the op­tions so far. With a strike price of $31.17, those 2.64 mil­lion op­tions would be worth $589 mil­lion if he had ex­er­cised them at Fri­day’s close. The to­tal op­tion award is in­tended to com­pen­sate Musk, who has never ac­cepted his salary, for 10 years.

For Musk to re­ceive the $1.6 bil­lion, he needs to boost Tesla’s value an­other 28% to $43.2 bil­lion. He also has to main­tain a 30% gross profit mar­gin for four quar­ters, bring the car­maker’s ag­gre­gate pro­duc­tion to 300,000 ve­hi­cles and bring the Model 3 to mar­ket.

In April, six an­a­lysts set 12-month price tar­gets of $325 or more for Tesla, the price at which Tesla’s mar­ket value would ex­ceed the max­i­mum tar­get.

“Many of the req­ui­site mile­stones were viewed as very dif­fi­cult to achieve” when they were granted in 2012, Tesla said in the fil­ing last week.

Khobi Brook­lyn, a Tesla spokes­woman, said the com­pany con­sid­ers the April 15 fil­ing its of­fi­cial com­ment.

Achieved? - Bloomberg Mile­stones Achieved?

Newspapers in English

Newspapers from India

© PressReader. All rights reserved.