On the one hand, Elon Musk receives as little compensation for his work at Tesla as probably no other CEO in the world, on the other hand more than anyone else: His base salary is 0 dollars, but with milestones being reached in sales, profit and He can secure Tesla stock options worth billions of dollars on the stock market. For the company, this does not mean a cash issue, but it still has to book the allocation of the options as a profit. And in the third quarter of 2020, Musk was so successful as CEO that it was budgeted for $ 282 million.
First installment for Tesla boss in May
This emerges from the official stock exchange announcement on the business figures in Q3 2020, which Tesla published this week. In the first nine months of the year, there was a total of $ 404 million in computational costs for the Musk program. The sums are made up of subsequent items because certain milestones have been reached, and precautionary items because more were in sight. Tesla’s share costs for other employees also rose, but Musk’s stock costs each accounted for around 90 percent of the total increase
Musk secured the first tranche in his twelve-step bonus program, in which he can receive options for 1 percent of the Tesla shares outstanding in 2018. As requested, the six-month average market cap exceeded $ 100 billion; the initial requirements for revenue ($ 20 billion) and adjusted profit ($ 1.5 billion) had already been met.
Reached four levels now
The approximately 1.7 million Tesla options (before the share split) had a calculated value of $ 770 million for Musk at the time – the difference between his strike price of $ 350.02 (again before the split) and the current one at the time Price on the stock market around $ 800. Then, with Tesla’s rapidly increasing market capitalization, two more tranches followed, each with a correspondingly higher value. And according to Forbes magazine, the Tesla numbers in the third quarter mean that Musk has already reached the conditions for the fourth stage.
For one, the stock market value had to be more than $ 250 billion for half a year, which has been the case for a long time, reports Forbes. In addition, the adjusted total earnings of the past four quarters of a good 5 billion dollars have been over 4.5 billion dollars, as required. This would release an additional 8.44 million options for the Tesla CEO with an exercise price of $ 70 per share once the board officially determines the results. Forbes puts the value of this tranche at $ 2.9 billion.
Luxury problem for Tesla shareholders
Tesla now counted roughly a tenth of that as additional costs for Musk options in Q3 2020 – so the burden on the company is far less than the arithmetical value for the CEO. Yet it is substantial. And in its 10Q report, Tesla points out that there could be more of such unexpectedly early bookings because stock market developments are unpredictable and business performance continues to improve. Most Tesla shareholders, however, are likely to see this as a downright luxury problem.