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Saturday, July 24, 2021

Tesla (NASDAQ:TSLA) CEO Reportedly Has Another 1.69 Million Stock Options

$TSLA #Tesla #USA #Nasdaq #Stocks #Markets #ElonMusk

Elon Musk has gained an additional 1.69 million stock options thanks to Tesla’s average trailing market value being above $150 billion over six months. While the CEO reportedly needs to wait five years before selling those shares, they presently have a value of around $2.1 billion.

Tesla is currently worth more than Volkswagen, Toyota and Hyundai combined. This is despite Tesla shares falling by virtually 5% Tuesday.

Once Tesla hit the six-month average trailing market cap of $150 billion, which Reuters first reported, Musk became eligible to access the second of 12 levels of options granted to him in an unprecedented pay package approved by shareholders in 2018. The board must still certify the milestone before the vesting option is triggered.

The milestone was met the day before Tesla is scheduled to report its second-quarter earnings.

The compensation plan consists of 20.3 million stock option awards broken up into 12 tranches of 1.69 million shares. These options will vest in increments if Tesla hits specific milestones on market cap, revenue and adjusted earnings (excluding certain one-time charges such as stock compensation). Once the board certifies each milestone, Musk is in a position to buy the 1.69 million shares at a steeply discounted price of $350.02 per share.

Based on today’s share price of $1,568.36, Musk could then sell 1.69 million shares for about $2.1 billion. keep in mind that Tesla’s board certified in may the first milestone, that unlocked the first tranche. So, combined, Musk would theoretically profit about $4.2 billion, based on today’s share price. However, there’s an important caveat to all of this. Musk must hold for a minimum of five years post-exercise any shares that he acquires upon exercise of the 2018 CEO performance award.

Musk has yet to exercise any of these choices, according to SEC filings.

To access the first tranche of stock options, Tesla’s market value had to reach a six-month average of $100.2 billion and either $20 billion in annual revenue or $1.5 billion in adjusted EBITDA. to meet the next milestone, Tesla’s market cap had to increase another $50 billion in value and $35 billion in revenue or $3 billion in adjusted EBITDA.

To qualify for the third tranche, Tesla’s market value must reach a six-month average of $200 billion and either $55 billion in revenue or $4.5 billion in adjusted EBITDA.

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