£9BILLION payday for Elon Musk
Tesla tycoon cashes in on bumper bonus scheme
TESLA boss Elon Musk is racing towards a mammoth £9bn bonus – one of the biggest in corporate history.
The electric car tycoon, who is the second-richest person on the planet, is set to trigger the payout after hitting performance targets.
His company has smashed Wall Street expectations and risen to become the world’s most valuable car maker in the past year, overtaking Japan’s Toyota.
However, despite being more valuable than Toyota, Volkswagen and Ford combined, Tesla made just 500,000 cars last year – compared to the millions churned out by its rivals.
Tesla’s latest results have put Musk, 49, on course to unlock the fifth and sixth tranches of a mega-bonus scheme. Musk, who is the firm’s biggest shareholder with 17.8pc, is only paid in shares after he decided to forgo a salary.
Under the scheme, the billionaire is handed stock when Tesla revenues, profits and market valuation hit milestones. Each tranche is 8.4m shares, with the latest payout set to total £9bn – or £8.1bn after he pays the exercise fee – based on Monday’s share price.
Overall, it would mean he has unlocked 50.7m shares worth nearly £27bn. Musk ( pictured) must hold on to the stock for five years after it vests, regulatory filings say.
But Luke Hildyard, director of the High Pay Centre, blasted the scheme.
He said: ‘A quick glance at Musk’s Twitter media feed reveals that he spent much of yesterday arguing with other users about bitcoin and how rich his parents were, and making innuendos about Amazon founder Jeff Bezos’s rival space programme.
‘The issue with billionaire entrepreneurs is not whether or not they should be rewarded for business success, but whether current reward levels are fair or proportionate. This is a colossal amount of money, likely to be one of the highest chief executive payouts ever.
‘It is impossible for one individual to be hard-working or innovative enough to be worth that much, and highlights the need for reform of our economic system.’
Musk is the world’s second-richest person with £135bn, behind only Amazon founder Jeff Bezos’s £143bn. Musk’s partner is pop star Grimes and he recently moved to Texas, claiming to have sworn off ‘physical possessions’ last year and put two of his homes in California up for sale.
His bonus scheme was first set out in 2018, when he was 44th richest person on the planet. To receive the full 101.4m shares, he needs to lead the company to an average market capitalisation of $650bn (£467bn) for at least six months, while also achieving annualised revenues of £126bn and adjusted profits of £10bn.
At the time it was launched, Tesla was worth about £42bn.
The board said targets would give ‘Elon the ability to share in the upside in a way that is commensurate with the difficulty of achieving them’. But since then the share price has rallied more than 1,000pc higher, as green government policies have turbocharged demand for electric vehicles. The company was yesterday worth about $708bn (£509bn).
Revenues in the past four quarters have reached £25.8bn and adjusted profits £4.8bn – triggering more tranches in Musk’s share award plan. He will trigger another if the company hits annualised revenues of about £39.5bn or adjusted profits of about £5.8bn.
However, the road is far from certain as the market becomes more crowded. Yesterday, Danni Hewson, of AJ Bell, claimed Tesla was still ‘ lossmaking at its core’.
She said £ 372m of income reported in the first three months of 2021 was ‘generated, not from car sales but from regulatory credits, sold to more polluting car makers’. Another £79m came from selling some bitcoin.