Tesla reached a historical milestone Wednesday, when its shares rose 4%, to close Wednesday at $569.56, and give the company a market capitalization of $102.7 billion. And crossing that $100 billion valuation threshold sets Musk up for a big potential payout in the form of Tesla stock options.
To put Tesla’s market cap in some perspective, the company is currently worth more than auto giants Ford ($36.5 billion in market value) and General Motors ($50 billion in market value) combined.
If Tesla can maintain a market valuation of at least $100 billion on both an average of 30 days, and over the next six months, and the company reports certain revenue or earnings results, Musk would be awarded 1.7 million Tesla stock options worth $346 million.
The options would be the first in a series of awards Musk could receive over the next eight years that could net him as much as $56 billion should Tesla’s valuation grow in $50 billion increments, and eventually reach a market cap of $650 billion by 2028.
Musk owns about 20% of Tesla’s outstanding shares, and currently receives no salary or other direct financial compensation for his work at Tesla. His compensation package was approved by Tesla shareholders in 2018. That same year, Musk received a salary and stock-option payment package worth $2.29 billion that made him the highest-compensated U.S. chief executive by more than $2 billion.
Musk’s current compensation plan could be overturned by a judge in Delaware Chancery Court, where a Tesla stockholder has sued Musk, and Tesla’s board of directors, on the grounds that the plan amounts to a breach of the company’s fiduciary duty.
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