Tesla CEO Elon Musk is nearing the first $346 million of stock awards in a record-breaking compensation package, after the electric carmaker’s stock more than doubled over the past three months.
Tesla shares soared 9% on Monday, marking a new record high. The stock needs to climb an additional 6% to send its market value to $100 billion and then maintain that value for both one-month, and six-month average in order to trigger the vesting for the first 12 tranches of options granted to Musk, which would allow him to acquire Tesla stock.
Musk doesn’t receive any salary or cash bonuses at the moment except stock award options that vest in accordance with the automaker’s market cap and growth milestones.
According to the terms of Musk’s January 2018 pay package, the next group of options tranches will become available for every $50 billion market value jump. This means that if the company’s market cap increases up to $650 billion, Elon Musk would receive the full record-breaking compensation package, of which the value could surge up to $56 billion in stock awards.
As reported by the proxy advisory firm Institutional Shareholder Services, if Musk gets the full compensation package, it would beat any other grants that the U.S. executives had received. Institutional Shareholder Services advised investors against accepting the pay package deal at the time.
“This is the very definition of pay for performance,” stated Ian Keas, senior director at Longnecker & Associates, a compensation and governance 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.”
If Elon Musk receives the full package, it would compare to the $638 million obtained by Snap Inc founder Evan Spiegel 3 years ago, following the social media giant’s IPO.
Walt Disney CEO Robert Iger received $149.6 million of stock awards back in 2018, including awards linked to Disney’s acquisition of film and television resources from Twenty-First Century Fox.
Musk holds around 34 million Tesla shares at the moment, approximating to 19% of the company. The potential pay package would allow him to buy an additional 20.3 million shares if all of his options vest.