The surge in the shares of Tesla Inc (NASDAQ: TSLA) is likely to bring a $1.8 billion payday for the company’s CEO Elon Musk who managed to achieve another market capitalization milestone.
What Happened
If Tesla’s six-month average market capitalization reaches $150 billion, it will vest the second of 12 tranches of options made available to Musk. The first tranche became vested in May, reported Reuters.
The stock options were given to the CEO as a part of his 2018 remuneration package. Each of the 12 tranches gives Musk the option to purchase 1.69 million shares at $350.02 each.
The Tesla chief executive could, in theory, benefit to the tune of $3.5 billion from the release of both the May and the upcoming tranches at current stock valuation.
On Wednesday, Tesla stock closed above $1,365, taking the company’s market capitalization to $253.38 billion.
Why It Matters
Tesla had paid Musk in 1.7 million shares valued above $700 million in May. The tranche was paid for keeping the company’s market capitalization at $100 billion on a 30-day and six-month trailing average.
Musk is not paid any salary, but he owns nearly 18.5% of Tesla, which is 38.7 million shares.
Tesla stock has surged as the company delivered 90,650 cars in the second quarter despite facing a factory shutdown due to the ongoing pandemic.
The automaker's stocks hit their 52-week high of $1,429.50 on Tuesday.
The strong delivery numbers are raising expectations that the automaker will experience a profitable second quarter, which could lead to Tesla enjoying four consecutive quarters in profit and coming closer to becoming a part of the S&P 500 index, noted Reuters.
Price Action
Tesla shares traded 0.36% lower at $1,361.03 in the after-hours session on Wednesday. The shares had closed the regular session 1.73% lower at $1,365.88.
Image by Daniel Oberhaus (2018)
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