Musk gets first tranche of multimillion-dollar Tesla incentive payout

Elon Musk attends the Tesla Gigafactory opening ceremony in Shanghai, east China, January 7, 2019.

Ding Ting | Xinhua News Agency | Getty Images

Tesla confirmed that CEO Elon Musk had won the first installment of his huge incentive payment, in a document filed Thursday with the Securities and Exchange Commission.

The tranche is made up of approximately 1.7 million Tesla shares and would be valued at approximately $ 775 million based on today’s closing market value. Tesla shares closed at $ 805.81 on Thursday, and the options have an exercise price of $ 350.02.

Thursday’s case, which also set July 7 for the company’s annual meeting of shareholders, said:

“As of the date of this proxy circular, one of the 12 tranches of this allotment vest and becomes exercisable, subject to payment by Mr. Musk of the exercise price of $ 350.02 per share and the minimum holding period of five years generally applicable to any shares he acquires during exercise. “It is not clear if Musk has still exercised the options.

Musk won the first part of its stock options to maintain the company’s market capitalization at $ 100 billion on a 30-day, six-month moving average.

According to a 2018 regulatory filing outlining terms of payment, Tesla also had to reach $ 20 billion in fourth quarter revenue or $ 1.5 billion in EBITDA (less stock-based compensation) for Musk to obtain the tranche .

Musk takes no salary but owns about 18.5 percent of the business on May 1, according to FactSet, a stake of about $ 24 billion. Its full allocation is expected to be vested in 12 tranches with different milestone requirements, reaching up to $ 650 billion in market capitalization for Tesla.

Tesla shareholder Richard Tornetta challenges the compensation plan in a lawsuit against Musk and members of Tesla’s board of directors. Tornetta alleged in the lawsuit that Tesla’s board of directors breached its fiduciary duty by awarding Musk excessive compensation.

Tesla was forced to restrict operations during the coronavirus pandemic, to Musk’s frustration. When Tesla analysts called in the first quarter, Musk called home stay orders intended to slow the spread of the virus “fascists.”

In March, the company ceased operations at its electric vehicle assembly plant in Fremont, California, after the county said it was not considered an essential business allowed to work on orders. on-site shelters linked to Covid-19. The factory reopened in May.

In early May, before Tesla reopened the auto plant, Tesla shares fell more than 10% in a single day when Musk tweeted that the stock price was “too high”, but the shares have since recovered this loss, then some.

Musk has previously agreed with the SEC to submit public statements on Tesla’s finances for legal counsel verification after the CEO tweeted that he had obtained funding to privatize Tesla at $ 420 per share.

After Wall Street newspaper asked Musk if his share price tweet was a joke or was approved, Musk replied “no”. The SEC declined to comment on the tweet.

Tesla reopened its Fremont plant the weekend of May 9, disregarding local health orders without consequences.

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